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EXHIBIT 10.1
EXECUTION COPY
AMENDED AND RESTATED
AGREEMENT AND PLAN
OF RECAPITALIZATION
DATED AS OF APRIL 10, 2001
AMONG
HALLIBURTON COMPANY,
THE SELLER NAMED HEREIN,
AND
DEG ACQUISITIONS, LLC
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Definitions...................................................................................2
Section 1.02. Rules of Construction.........................................................................2
ARTICLE II
SALE AND PURCHASE
Section 2.01. Sale and Purchase of Securities...............................................................2
Section 2.02. Sale and Purchase of BV Companies.............................................................4
Section 2.03. Cash Consideration............................................................................4
Section 2.04. The Closings..................................................................................4
Section 2.05. Pre-Closing Transactions......................................................................5
Section 2.06. Transactions at the First Closing.............................................................5
Section 2.07. Transactions at the Second Closing............................................................7
Section 2.08. Adjustment of the Preliminary Purchase Price..................................................8
Section 2.09. Procedures for Calculating the Purchase Price Adjustment......................................9
Section 2.10. Adjustments to Net Equity....................................................................11
Section 2.11. Allocation of Purchase Price Adjustment......................................................13
Section 2.12. Amendments to Effect Recapitalization........................................................13
Section 2.13. Delayed Purchases............................................................................13
Section 2.14. Joint Ventures...............................................................................14
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING PARENT AND DRESSER INDUSTRIES
Section 3.01. Organization and Qualification...............................................................15
Section 3.02. Authorization of Agreement...................................................................15
Section 3.03. Approvals....................................................................................16
Section 3.04. No Violation.................................................................................16
Section 3.05. No Brokers...................................................................................16
Section 3.06. Title to Securities..........................................................................17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER
Section 4.01. Organization.................................................................................17
Section 4.02. Authorization of Agreement...................................................................17
Section 4.03. Approvals....................................................................................18
Section 4.04. No Violation.................................................................................18
Section 4.05. Title to Securities..........................................................................18
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ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING MEMBERS OF THE COMPANY GROUPS
Section 5.01. Organization; Subsidiaries...................................................................19
Section 5.02. Organizational Documents; Authorization; No Violation........................................20
Section 5.03. Capitalization...............................................................................20
Section 5.04. Title to Properties..........................................................................21
Section 5.05. Financial Statements.........................................................................22
Section 5.06. Authorizations...............................................................................23
Section 5.07. Compliance With Laws; Regulation of Businesses...............................................24
Section 5.08. Taxes........................................................................................24
Section 5.09. Principal Contracts..........................................................................26
Section 5.10. Employees....................................................................................26
Section 5.11. Environmental Matters........................................................................30
Section 5.12. Litigation...................................................................................31
Section 5.13. Material Adverse Changes.....................................................................31
Section 5.14. Customers and Suppliers......................................................................32
Section 5.15. Adequacy of Assets...........................................................................32
Section 5.16. Full Disclosure..............................................................................32
Section 5.17. Disclaimers..................................................................................32
ARTICLE VI
REPRESENTATIONS AND WARRANTIES REGARDING ACQUIROR
Section 6.01. Organization and Qualification...............................................................33
Section 6.02. Authorization of Agreement...................................................................33
Section 6.03. Approvals....................................................................................34
Section 6.04. No Violation.................................................................................34
Section 6.05. Commitment Letters...........................................................................34
Section 6.06. No Brokers...................................................................................34
Section 6.07. Transitory Merger Sub........................................................................34
ARTICLE VII
REPRESENTATIONS AND WARRANTIES REGARDING BUYERS
Section 7.01. Organization.................................................................................35
Section 7.02. Authorization of Agreement...................................................................35
Section 7.03. Approvals....................................................................................35
Section 7.04. No Violation.................................................................................35
Section 7.05. Investment in Securities.....................................................................36
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ARTICLE VIII
COVENANTS OF THE PARENT
Section 8.01. Affirmative Covenants Regarding Operation of the Businesses..................................36
Section 8.02. Negative Covenants Regarding the Operation of the Businesses.................................37
Section 8.03. Access to Information........................................................................41
Section 8.04. Insurance Benefits...........................................................................41
Section 8.05. Compliance with Competition Laws Applicable to Designated Regulatory Assets..................42
Section 8.06. Covenant Not to Compete......................................................................44
Section 8.07. Nonsolicitation..............................................................................45
Section 8.08. Accountants' Opinion and Consents............................................................46
Section 8.09. Financing....................................................................................46
Section 8.10. Financial Statements.........................................................................48
Section 8.11. Assignments..................................................................................48
Section 8.12. Release of Liens.............................................................................48
Section 8.13. Environmental Schedules......................................................................48
Section 8.14. Use of Dresser Name..........................................................................48
ARTICLE IX
COVENANTS OF THE ACQUIROR
Section 9.01. Confidentiality Agreement....................................................................49
Section 9.02. Corporate Name...............................................................................49
Section 9.03. Surety Arrangements..........................................................................49
Section 9.04. Dresser Valve Division Contracts.............................................................49
ARTICLE X
MUTUAL COVENANTS
Section 10.01. Cooperation..................................................................................50
Section 10.02. Ancillary Agreements.........................................................................52
Section 10.03. Public Announcements.........................................................................53
Section 10.04. Transfer Taxes...............................................................................53
Section 10.05. Expenses.....................................................................................53
Section 10.06. Tax Matters..................................................................................53
Section 10.07. Offers to Employees..........................................................................56
Section 10.08. Related Party Contracts......................................................................57
Section 10.09. Litigation Support...........................................................................57
Section 10.10. Post-Closing Matters.........................................................................58
ARTICLE XI
CONDITIONS TO FIRST CLOSING
Section 11.01. Conditions to Obligations of Each Party Under This Agreement.................................59
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Section 11.02. Additional Conditions to the Parent's Obligations............................................60
Section 11.03. Additional Conditions to the Acquiror's Obligations..........................................61
ARTICLE XII
INDEMNIFICATION
Section 12.01. Survival of Representations, Warranties, Covenants and Agreements............................63
Section 12.02. General Indemnification by the Parent........................................................64
Section 12.03. General Indemnification by the Acquiror......................................................68
Section 12.04. Procedures...................................................................................69
Section 12.05. Special Environmental Indemnification Provisions.............................................72
Section 12.06. Punitive Damages.............................................................................75
Section 12.07. Failure of Acquiror to Close.................................................................75
Section 12.08. No Right of Contribution.....................................................................75
Section 12.09. Specific Performance.........................................................................75
Section 12.10. Sole Remedy..................................................................................75
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVER
Section 13.01. Termination..................................................................................76
Section 13.02. Effect of Termination........................................................................77
Section 13.03. Amendment....................................................................................77
Section 13.04. Waiver.......................................................................................77
ARTICLE XIV
MISCELLANEOUS
Section 14.01. Notices......................................................................................77
Section 14.02. Headings.....................................................................................79
Section 14.03. Severability.................................................................................79
Section 14.04. Entire Agreement.............................................................................79
Section 14.05. Assignment...................................................................................80
Section 14.06. Successors; Parties in Interest..............................................................80
Section 14.07. Failure or Indulgence Not Waiver; Remedies Cumulative........................................80
Section 14.08. Disclosure Letters...........................................................................80
Section 14.09. Governing Law................................................................................80
Section 14.10. Arbitration..................................................................................80
Section 14.11. Confidentiality Agreements...................................................................81
Section 14.12. Counterparts.................................................................................81
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ANNEXES
Annex A -- Definitions.
Annex B -- Reorganization (Components and Procedure).
Annex C -- List of the Seller, Buyers and BV Companies and BV Allocable Purchase Price.
Annex D -- Allocation Procedures for Purchase Price Adjustment.
APPENDICES
Appendix I -- Form of Merger Agreement.
Appendix II -- Forms of Releases of Intercompany Indebtedness.
Appendix III -- Forms of Releases of Claims.
Appendix IV -- Form of Assignment of Name.
Appendix V -- Form of Highway 6 Lease Agreement.
Appendix VI -- Form of Employee Benefits Agreement.
Appendix VII -- Form of Transition Services Agreement.
Appendix VIII -- Form of Stockholders' Agreement.
Appendix IX -- Form of Category 2A Purchase and Sale Agreement.
Appendix X -- Form of Opinion of Acquiror's Counsel.
Appendix XI -- Form of Opinion of Parent's Counsel.
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EXECUTION COPY
AMENDED AND RESTATED AGREEMENT AND PLAN OF RECAPITALIZATION
This AMENDED AND RESTATED AGREEMENT AND PLAN OF RECAPITALIZATION (this
"Agreement") dated as of April 10, 2001, is by and among Halliburton Company, a
Delaware corporation (the "Parent"), Dresser B.V., a Netherlands company and a
wholly owned indirect Subsidiary of the Parent (the "Seller") and DEG
Acquisitions, LLC, a Delaware limited liability company (the "Acquiror"). This
Agreement amends and restates in its entirety that certain Agreement and Plan of
Recapitalization dated as of January 30, 2001 by and among the Parent, the
Seller and the Acquiror, as amended by Amendatory Agreement No. 1 thereto, dated
March 2001, and Amendatory Agreement No. 2 thereto, dated March 2001. References
in this Agreement to the "date of this Agreement," or "the date hereof" shall
refer to January 30, 2001.
RECITALS:
The Parent has determined to redeploy a significant portion of its
assets. Accordingly, the Parent desires to sell, and the Acquiror has determined
to purchase, certain interests in the Parent's businesses relating to, among
other things, the design, manufacturing and marketing of engineered measurement,
flow control and power systems for customers primarily in the energy industry.
In order to accomplish this transaction, the Parent will, in
consultation with the Acquiror and in the manner set forth herein, prior to the
First Closing effect the Reorganization described in Annex B of the various
legal entities that comprise the Dresser Equipment Group.
After giving effect to the Reorganization, (a) the Parent desires to
cause Dresser Industries and DEGI to engage, and the Acquiror desires to engage,
and to cause Transitory Merger Sub to engage, in the transactions contemplated
by Article II herein at the First Closing and (b) immediately following the
First Closing, the Parent desires to cause the Seller to engage, and the
Acquiror desires to cause the Buyers to engage, in the transactions contemplated
by Article II herein at the Second Closing.
On Xxxxx 00, 0000, XXXX changed its legal name from "Dresser Equipment
Group, Inc." to "Dresser, Inc." References in this Agreement (including the
exhibits, annexes and schedules hereto) to "Dresser Equipment Group, Inc." shall
mean Dresser, Inc.
NOW, THEREFORE, the parties hereto, in consideration of the premises
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Capitalized and other terms used in this
Agreement are defined in Annex A attached hereto and are used herein with the
meanings ascribed to them therein.
Section 1.02. Rules of Construction.
(a) Unless the context otherwise requires, as used in this
Agreement: (i) a term defined in Annex A has the meaning
ascribed to it in Annex A; (ii) an accounting term not defined
herein has the meaning ascribed to it in accordance with U.S.
GAAP; (iii) "or" is not exclusive; (iv) "including" means
"including without limitation;" (v) words in the singular
include the plural and vice versa; (vi) words applicable to
one gender shall be construed to apply to each gender; (vii)
the terms "hereof," "herein," "hereby," "hereto" and
derivative or similar words refer to this entire Agreement,
including the Annexes and Appendices hereto; (viii) the terms
"Article," "Section," "Annex" and "Appendix" shall refer to
the specified Article, Section, Annex or Appendix of or to
this Agreement; (ix) the term "Schedule" shall refer to the
appropriate Schedule to the Parent's Disclosure Letter or the
Acquiror's Disclosure Letter; and (x) the phrases "pursuant
to," "as described in" and "subject to the terms of," when
used with reference to a particular Section of this Agreement,
or words of similar import, shall refer to such Section and to
any Schedule of the Parent's Disclosure Letter or the
Acquiror's Disclosure Letter referenced therein.
(b) A reference to any Person includes such Person's successors
and permitted assigns.
(c) Any reference to "days" shall mean calendar days unless
"Business Days" (as defined in Annex A) are expressly
specified.
(d) Each Annex and Appendix identified in this Agreement is
incorporated herein by reference and made a part hereof for
all purposes.
(e) The Parent and the Acquiror, each represented by legal
counsel, have each participated in the negotiation and
drafting of this Agreement. If an ambiguity or question of
intent or interpretation should arise, this Agreement shall be
construed as if drafted jointly by such parties and no
presumption or burden of proof shall arise favoring or
burdening any party hereto by virtue of the authorship of any
of the provisions of this Agreement.
ARTICLE II
SALE AND PURCHASE
Section 2.01. Sale and Purchase of Securities. On the terms and subject
to the conditions contained in this Agreement, the Parent agrees to cause DEGI
and Dresser Industries to engage at the First Closing in the following
transactions, and the Acquiror agrees to engage and to cause the Transitory
Merger Sub to engage at the First Closing in the following transactions:
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(a) The Acquiror shall purchase from Transitory Merger
Sub, upon original issue, common stock of Transitory
Merger Sub for cash in an amount in U.S. Dollars
(which the Acquiror estimates will be approximately
$400,000,000) equal to at least the Purchase Price,
plus fees and expenses incurred by the Acquiror in
connection with the transactions contemplated hereby
(other than fees or discounts related to the Loan)
less the Loan (the "Investment");
(b) DEGI shall borrow an amount in cash in U.S. Dollars
equal to at least $970,000,000 (nine hundred seventy
million dollars) (the net proceeds to DEGI pursuant
to this clause (b), being the "Loan"), comprised of
(i) borrowings from a syndicate of Lenders on Terms
contemplated by the Commitment Letter Term Sheet
attached to the Bank Commitment Letter and (ii) the
proceeds from the issuance of senior subordinated
notes in a private placement of such notes or
borrowings from a syndicate of Lenders on the Terms
contemplated by the Commitment Letter Term Sheet
attached to the Bridge Commitment Letter; and
(c) The Acquiror and the Parent shall cause the merger
(the "Merger") of Transitory Merger Sub with and into
DEGI, which shall be the corporation surviving the
Merger, to be effected through execution and delivery
of the Merger Agreement and the filing thereof with
the Secretary of State of Delaware, pursuant to
which:
(i) All the issued and outstanding capital stock
of Transitory Merger Sub shall be converted
into an aggregate number of shares of common
stock of DEGI ("DEGI Common Stock") equal to
(i) the total number of shares of DEGI
Common Stock outstanding immediately prior
to the Merger multiplied by (ii) 0.949;
(ii) subject to the provisions of clause (iii) of
this subsection (c), the number of shares of
DEGI Common Stock owned by Dresser
Industries equal to (i) the total number of
shares of DEGI Common Stock outstanding
immediately prior to the Merger multiplied
by (ii) 0.949 shall be converted into the
right to receive cash in an aggregate amount
equal to (A) the DEGI Group Preliminary
Purchase Price Percentage times the
Preliminary Purchase Price as adjusted by
(B) a portion of the Purchase Price
Adjustment determined in accordance with the
Allocation Procedures (the "Merger
Consideration") (with the balance of the
shares of DEGI Common Stock owned by Dresser
Industries to remain outstanding); and
(iii) if any Management Shares are outstanding at
the effective date of the Merger, then (A)
the number of shares of DEGI Common Stock
converted into the right to receive cash
pursuant to clause (ii) of this subsection
(c) shall be increased by a number equal to
the number of
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Management Shares and (B) the consideration
payable to Dresser Industries in connection
with the Merger shall be increased by the
amount of the cash consideration received by
DEGI against the issuance of such Management
Shares.
(d) Any Management Shares issued by DEGI prior to the
First Closing shall be sold to management employees
at a price per share not less than an amount equal to
the Merger Consideration plus the BV Consideration
divided by the number of shares of DEGI Common Stock
to be converted by Dresser Industries in the Merger
as determined pursuant to clause (ii) of subsection
2.01(c) before giving effect to clause (iii) of
subsection 2.01(c).
Section 2.02. Sale and Purchase of BV Companies. On the terms and
subject to the conditions contained in this Agreement, the Parent agrees to
cause the Seller to engage at the Second Closing in the following transactions,
and the Acquiror agrees to cause each of the Buyers to engage at the Second
Closing in the following transactions: The Seller shall assign to the
appropriate Buyer as indicated on Annex C hereto, and such Buyer shall accept,
the Equity Securities of the BV Company whose name is set forth next to the name
of such Buyer on Annex C hereto. In consideration for such assignments, the
Buyers shall pay to the Seller cash in U.S. Dollars in an aggregate amount equal
to (a) the BV Preliminary Purchase Price Percentage times the Preliminary
Purchase Price as adjusted by (b) a portion of the Purchase Price Adjustment
determined in accordance with the Allocation Procedures (the "BV
Consideration").
Section 2.03. Cash Consideration.
(a) The aggregate cash consideration to be paid to Dresser
Industries and the Seller for engaging in the transactions
contemplated by Sections 2.01 and 2.02 herein shall consist of
the Purchase Price. The "Purchase Price" shall be equal to the
Preliminary Purchase Price as adjusted by the Purchase Price
Adjustment in accordance with Sections 2.08 and 2.09.
(b) The parties hereto have agreed that the "Preliminary Purchase
Price" shall be equal to (i) U.S. $1,309,111,797 (one billion
three hundred nine million one hundred eleven thousand seven
hundred ninety-seven dollars) less (ii) the amount which, when
taken together with the aggregate consideration paid to
acquire the Management Shares, equals 5.1% of the Equity of
DEGI.
Section 2.04. The Closings.
(a) The transactions contemplated by Section 2.01 shall be
consummated (the "First Closing") on the date and at the time
and place determined pursuant to this subsection (a). The
First Closing shall be held at the offices of Xxxxxx &
Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the
Closing Date. The "Closing Date" shall be the fifteenth (15th)
Business Day following the date on which the Closing
Conditions (other than conditions that can be satisfied only
by delivery of
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certificates or other documents at the Closings and where such
delivery is in the control of a party hereto) have been
fulfilled or waived. If such date is not a Business Day, then
the Closing Date shall be the next succeeding Business Day.
(b) Upon fulfillment or waiver of the Closing Conditions to which
reference is made in subsection (a) of this Section, either
the Parent or the Acquiror may give the other notice thereof
(the "Closing Notice") and the date of receipt of such Closing
Notice determined in accordance with Section 14.01 shall be
the first Business Day of the time periods therein referenced.
(c) Immediately following the First Closing, the transactions
contemplated by Section 2.02 shall be consummated (the "Second
Closing"). The Second Closing shall be held at the same
location as the First Closing. The consummation of the Second
Closing shall be a condition subsequent to the consummation of
the First Closing, such that if the Second Closing shall not
occur immediately following the First Closing either the
Parent or the Acquiror shall be entitled to cause the
rescission of the transactions consummated at the First
Closing.
Section 2.05. Pre-Closing Transactions.
(a) Prior to the First Closing, the Parent shall effect the
Reorganization described in Annex B. The Parent and the
Acquiror shall cooperate with each other with respect to the
implementation of the Reorganization described in Annex B,
including actions involving filings with Governmental
Authorities, the execution of agreements, transfer documents
and similar instruments and the issuance of securities. If the
Parent and the Acquiror consent in writing to any action that
is inconsistent with the transactions described on Annex B
hereto, then Annex B shall, automatically and without further
action by the parties hereto, be deemed to have been amended
to the extent necessary to permit such action.
(b) The Parent shall prior to the First Closing cause the
outstanding DEGI Common Stock to be subdivided pursuant to a
stock split on a basis that is mutually satisfactory to the
Acquiror and the Parent.
(c) In any case in which the Reorganization, as the Reorganization
may be amended as provided in subsection (a) of this Section
2.05 prior to the First Closing, requires that a member of a
Company Group be "formed" or otherwise implies that it must be
organized de novo, the parties hereto acknowledge that counsel
to, or other representatives of, the Parent or the Acquiror
may, in lieu of a legal entity organized de novo, use a
previously formed legal entity "off the shelf" for such
purpose ( herein called a "Shelf Entity").
Section 2.06. Transactions at the First Closing. Subject to the terms
and conditions of this Agreement, the Parent shall at the First Closing cause
DEGI to do and perform the following actions
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and to deliver the following documents, and the Acquiror shall do and perform
the following actions and deliver the following documents. At the First Closing,
the following events shall occur, each event being (i) conditioned on the
occurrence or waiver of each other event and (ii) deemed to occur simultaneously
with each other event:
(a) Financial Transactions:
(i) The Acquiror shall purchase from the Transitory
Merger Sub upon original issue shares of common stock
for cash in the amount of the Investment;
(ii) DEGI shall execute and deliver the Loan Documents
against the funding of the full amount of the Loan to
DEGI by wire transfer of immediately available funds
to the wire transfer address of DEGI provided in
written instructions to the Acquiror not less than
three (3) Business Days prior to the Closing Date;
and
(iii) the Parent and the Acquiror shall cause the Merger to
be effected in accordance with subsection (c) of
Section 2.01; provided, however, that the amount of
cash to be paid to Dresser Industries pursuant to the
Merger at the time of the First Closing (subject to
adjustment pursuant to Sections 2.08 and 2.09) shall
be an aggregate amount equal to the DEGI Group
Preliminary Purchase Price Percentage times the
Estimated Purchase Price. The consideration to be
received by Dresser Industries pursuant to the Merger
shall be paid to Dresser Industries by wire transfer
of immediately available funds to the wire transfer
address of Dresser Industries provided in written
instructions by the Acquiror not less than three (3)
Business Days prior to the Closing Date.
(b) Ancillary Agreements. The parties to each Ancillary Agreement
shall execute and deliver such Ancillary Agreement.
(c) Intercompany Indebtedness. Any Intercompany Indebtedness owed
at the Closing Date by any member of the Parent Group to any
member of the DEGI Group or by any member of the DEGI Group to
any member of the Parent Group shall be discharged, whether,
at the election of the Parent (provided, that the Parent shall
cooperate with the Acquiror to structure such discharge in the
manner that is most tax-efficient to all the parties), by
payment by the obligor or by release and forgiveness by the
obligee pursuant to a written release, in form and substance
substantially similar to the form thereof attached hereto as
Appendix II, executed and delivered at the First Closing. The
Intercompany Indebtedness has not been reflected in the
Initial Balance Sheet, and will not be reflected in the
Estimated or Closing Balance Sheet, as an asset or liability
and, consequently, shall have no effect on the calculation of
the Purchase Price Adjustment hereunder.
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(d) The Parent shall at the First Closing execute, where
appropriate, and deliver to the Acquiror the following
documents:
(i) A release, in form and substance substantially
similar to the form thereof attached hereto as
Appendix III, by the Parent on behalf of itself and
the Parent Group of all claims that they may have
against any member of the DEGI Group with respect to
the operation or conduct of the Businesses prior to
the Closing Date;
(ii) A certificate in the form required by Treasury
Regulation Section 1.1445-2; and
(iii) such other documents and instruments as shall
evidence fulfillment or waiver of the Closing
Conditions.
(e) The Acquiror shall at the First Closing execute, where
appropriate, and deliver to the Parent such documents and
instruments as shall evidence fulfillment or waiver of the
Closing Conditions.
Section 2.07. Transactions at the Second Closing. Subject to the terms
of this Agreement and to the condition that the First Closing shall have been
effected, the Parent shall cause the Seller at the Second Closing to do and
perform the following actions and to deliver the following documents, and the
Acquiror shall do and perform the following actions and cause the Buyers at the
Second Closing to do and perform the following actions and to deliver the
following documents. At the Second Closing, the following events shall occur,
each event being (i) conditioned on the occurrence or waiver of each other event
and (ii) deemed, except as otherwise provided in subsection (b) of this Section,
to occur simultaneously with each other event:
(a) The Parent shall cause the Seller to deliver, in the sequence
provided on Annex C, to the appropriate Buyer the certificate
or certificates evidencing the Equity Securities of the BV
Companies to be sold by it at the Second Closing in accordance
with Annex C, which certificates shall be duly endorsed for
transfer or accompanied by duly executed stock transfer powers
or other appropriate instruments of assignment and transfer in
favor of the Buyer;
(b) The Acquiror shall cause the Buyers to deliver or cause to be
delivered to the Seller cash in the amount of the BV
Preliminary Purchase Price Percentage times the Estimated
Purchase Price. Such amount shall be paid in United States
Dollars by wire transfer of immediately available funds to the
wire transfer address of the Seller provided in written
instructions by the Seller not less than three (3) Business
Days prior to the Closing Date.
(c) Any Intercompany Indebtedness owed at the Closing Date by any
member of the Parent Group to any member of the BV Group or by
any member of the BV Group
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to any member of the Parent Group shall be discharged,
whether, at the election of the Parent (provided, that the
Parent shall cooperate with the Acquiror to structure such
discharge in the manner that is most tax-efficient to all the
parties), by payment by the obligor or by release and
forgiveness by the obligee pursuant to a written release, in
form and substance substantially similar to the form thereof
attached hereto as Appendix II, executed and delivered at the
Second Closing. The Intercompany Indebtedness has not been
reflected in the Initial Balance Sheet, and will not be
reflected in the Estimated or Closing Balance Sheet, as an
asset or liability and, consequently, shall have no effect on
the calculation of the Purchase Price Adjustment hereunder.
(d) The Parent shall at the Second Closing execute, where
appropriate, and deliver to the Acquiror, a release, in form
and substance substantially similar to the form thereof
attached hereto as Appendix III, by the Parent on behalf of
itself and the Parent Group of all claims that they may have
against any member of the BV Group with respect to the
operation or conduct of the Businesses prior to the Closing
Date.
Section 2.08. Adjustment of the Preliminary Purchase Price.
(a) By no later than five (5) Business Days after the delivery of
a Closing Notice, the Parent shall deliver to the Acquiror on
a consolidated basis, (i) the balance sheet of the Businesses
as of December 31, 2000 and the related statement of results
of operations for the twelve months then ended (the "Year-End
Financial Statements") and (ii) the balance sheet (the
"Estimated Balance Sheet") as of the close of business on the
last day of the most recently completed calendar month for
which internal management financial statements are available
(the "Estimated Balance Sheet Date") and the related statement
of results of operations of the Businesses for the period
beginning on January 1, 2001 and ending on the Estimated
Balance Sheet Date (together with the Estimated Balance Sheet,
the "Estimated Financial Statements"). The Year End Financial
Statements and the Estimated Financial Statements shall be
prepared in accordance with U.S. GAAP applied consistently
with the Initial Financial Statements. The Year End Financial
Statements shall present fairly the financial position and the
results of operations of the Businesses as of the date and for
the period then ended and the Estimated Financial Statements
shall, to the extent reasonably practicable in light of the
purpose for which they were prepared and the time parameter
provided in this subsection, present fairly the financial
position and results of operations of the Businesses as of the
date and for the period then ended.
(b) The "Estimated Purchase Price" shall mean the Preliminary
Purchase Price adjusted by the Estimated Purchase Price
Adjustment. The Preliminary Purchase Price shall be increased
by a positive Estimated Purchase Price Adjustment and
decreased by a negative Estimated Purchase Price Adjustment.
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(c) The "Estimated Purchase Price Adjustment" shall be an amount
equal to the increase (positive) or decrease (negative) in the
Net Equity as of the Initial Balance Sheet Date to the
Estimated Balance Sheet Date, determined, in accordance with
Section 2.10, by comparing the amount of Net Equity as of the
Initial Balance Sheet Date with the amount of Net Equity as of
the Estimated Balance Sheet Date; provided, however, that, if
the amount of such Estimated Purchase Price Adjustment is less
than U.S. $10,000,000 (ten million dollars), whether positive
or negative, the Estimated Purchase Price Adjustment shall be
deemed to be $0.
(d) For purposes of the determination of the Estimated Purchase
Price Adjustment and the Purchase Price Adjustment,
Intercompany Indebtedness shall be classified and reflected in
each of the Initial Balance Sheet, the Estimated Balance Sheet
and the Closing Balance Sheet neither as an asset nor a
liability.
Section 2.09. Procedures for Calculating the Purchase Price Adjustment.
(a) Following the end of the calendar month in which the First
Closing shall occur, the Acquiror shall cause to be prepared
and delivered to the Parent, no later than ninety (90) days
following the end of such month, on a consolidated basis, the
Closing Financial Statements, prepared in accordance with U.S.
GAAP applied consistently with the Initial Financial
Statements which shall be certified by Xxxxxx Xxxxxxxx LLP as
presenting fairly the financial position of the Businesses as
of the Closing Date. Thereafter, the Acquiror shall promptly
provide to the Parent such supporting work papers or other
supporting information as may be reasonably requested by the
Parent, including access to the work papers of Xxxxxx Xxxxxxxx
LLP prepared in connection with the audit of the Initial
Financial Statements and the audit of the Closing Financial
Statements. To the extent that the judgment of management of
the Businesses is relied upon for any estimate used to prepare
the Closing Balance Sheet as required or permitted by U.S.
GAAP, such judgment shall not differ in any material respect
from the judgment relied upon for the same or any similar
estimate used to prepare the Initial Financial Statements
unless there has been a material change since the date of the
Initial Financial Statements in the facts upon which such
judgment is based.
(b) If the Parent shall have any objections to the Closing Balance
Sheet, the Parent shall within twenty (20) Business Days
following receipt of the Closing Balance Sheet so notify the
Acquiror, stating in reasonable detail the basis for any such
objections; provided, however, that the only bases for
objection shall be (i) non-compliance with the standards set
forth in subsection (a) of this Section for the preparation of
the Closing Balance Sheet and (ii) computational errors. If
the Parent fails to notify the Acquiror of any such objections
in writing within such twenty (20) Business Day period, the
Parent shall be deemed to have concurred with the Closing
Balance Sheet. Otherwise, following any such notification, the
Acquiror and the Parent shall endeavor in good faith for a
period not to exceed twenty (20) Business Days to
HALLIBURTON COMPANY
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resolve their differences (the "Differences"). If the parties
are unable to resolve all their Differences and have not
agreed in writing to extend the resolution period, either the
Parent or the Acquiror shall, if the aggregate amount of the
unresolved Differences does not exceed U.S. $10 million, be
entitled for a period of twenty (20) additional Business Days
to request the Accounting Firm to resolve the unresolved
Differences or, if the aggregate amount of the unresolved
Differences exceeds $10 million, to apply for arbitration
pursuant to the provisions of Section 14.10. If the parties
are unable to resolve all their Differences but neither party
shall apply to the Accounting Firm or for arbitration for
resolution of the remaining Differences, the determinations
set forth in the Closing Balance Sheet, as adjusted for those
Differences that the parties were able to resolve, shall be
deemed to be dispositive.
(c) If either party shall request the Accounting Firm to resolve
the unresolved Differences, both parties shall cooperate with
the Accounting Firm and its representatives by providing
access to all relevant Books and Records and access at
reasonable times to personnel having relevant information. The
Accounting Firm shall be requested to use all reasonable
efforts to resolve such Differences in favor of the Parent in
their entirety or in favor of the Acquiror in their entirety
within twenty (20) Business Days after the matter is referred
to it on the basis of the standards set forth in subsection
(a) of this Section or as soon thereafter as possible. Upon
completion of its task, the Accounting Firm shall notify each
party of its determination of the matters subject to the
Differences, which determination shall be conclusive. The fees
and expenses of the Accounting Firm shall be borne 50% by the
Parent and 50% by the Acquiror.
(d) If either party shall apply for arbitration to resolve the
unresolved Differences, or if the Accounting Firm is unable to
resolve the Differences, both parties shall cooperate with the
arbitration tribunal and its representatives by providing
access to all relevant Books and Records and access at
reasonable times to personnel having relevant information. The
arbitration tribunal shall be requested to use all reasonable
efforts to resolve such Differences in favor of the Parent in
their entirety or in favor of the Acquiror in their entirety
within twenty (20) Business Days after the matter is referred
to it on the basis of the standards set forth in subsection
(a) of this Section or as soon thereafter as possible. The
determination of the arbitration tribunal with respect to the
Differences shall be conclusive. Unless differently awarded by
the arbitration tribunal, the fees and expenses of arbitration
shall be borne 50% by the Parent and 50% by the Acquiror.
(e) The "Purchase Price Adjustment" shall mean an amount equal to
the increase (positive) or decrease (negative) in the Net
Equity of the Businesses from the Initial Balance Sheet Date
to the Closing Date in accordance with Section 2.10,
determined by comparing the amount of Net Equity as of the
Initial Balance Sheet Date with the amount of Net Equity as of
the Closing Date (based on the Closing Balance Sheet as
finally determined pursuant to subsections (a) through (d) of
this Section).
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(f) The result obtained by subtracting the Estimated Purchase
Price Adjustment from the Purchase Price Adjustment is
referred to as the "Post-Closing Payment Amount." The
Post-Closing Payment Amount shall be paid by the Acquiror to
the Parent if it is positive or by the Parent to the Acquiror
if it is negative, in cash in United States Dollars, by wire
transfer of immediately available funds to the wire transfer
address of the Acquiror provided in written instructions to
the Parent or to the wire transfer address of the Parent
provided in written instructions to the Acquiror, as
appropriate, on the third (3rd) Business Day following the
date on which the procedures in this Section 2.09 have been
completed. The Post-Closing Payment Amount shall bear simple
interest at the lowest interest rate applicable under the
revolving credit agreement referred to in the Commitment
Letter Term Sheets from the Closing Date to the date of such
payment, inclusive.
(g) If, notwithstanding the representations and warranties set
forth in subsection (a) of Section 5.05 herein, it shall be
determined that the Initial Financial Statements were not in
fact prepared in accordance with U.S. GAAP, the Closing
Financial Statements prepared pursuant to subsection (a) of
Section 2.09 need not be prepared consistently with the
Initial Financial Statements to the extent and only to the
extent that such Initial Financial Statements were not
prepared in accordance with U.S. GAAP. If the Closing
Financial Statements are not prepared consistently with the
Initial Financial Statements pursuant to this subsection (g)
of Section 2.09 and such inconsistency results in a decrease
in the amount of the Purchase Price Adjustment, any
indemnification to be paid by the Parent to the Acquiror with
respect to any such breach of the representations and
warranties in Section 5.05 that caused the Purchase Price
Adjustment shall be reduced by the amount of such decrease.
Section 2.10. Adjustments to Net Equity. In determining the Estimated
Purchase Price Adjustment and the Purchase Price Adjustment pursuant to Sections
2.08 and 2.09, the Net Equity reflected in the Initial Balance Sheet, the
Estimated Balance Sheet and the Closing Balance Sheet shall be adjusted as
follows:
(a) Solely for the purpose of determining Net Equity in
calculating the Estimated Purchase Price Adjustment and the
Purchase Price Adjustment, the Net Equity reflected in each of
such Balance Sheets shall be adjusted to exclude the following
assets and liabilities in order that these assets and
liabilities shall have no effect on the Estimated Purchase
Price Adjustment or the Purchase Price Adjustment: (i) The
Highway 6 Real Property; (ii) the accumulated projected
benefit obligation for the postretirement medical and life
benefits; (iii) assets transferred in excess of liabilities
assumed of the DICON defined benefit retirement plan (Plan No.
164); (iv) reserves for uninsured litigation; and (v) the
self-insurance reserves for workers' compensation, general
liability, product liability and automobile liability. For the
purpose of clarity of identification of the foregoing items,
the amounts reflected on, or missing from, the Initial Balance
Sheet for each of the above listed items is as follows: (A)
Real Property subject to the Highway 6 Deed: $12.4 million,
(B) the
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accumulated projected benefit obligation for the
post-retirement medical and life benefits: $128.3 million, (C)
assets transferred in excess of liabilities assumed of the
DICON defined benefit retirement plan (Plan No. 164): $9.0
million, (D) reserves for uninsured litigation: $10 million,
and (E) the self-insurance reserves, including case reserves
and IBNR, for workers' compensation, general liability,
product liability and automobile liability: $21.7 million.
(b) The Initial Balance Sheet includes an asset in the amount of
$14,708,000 (fourteen million seven hundred and eight thousand
dollars) representing the assets in excess of liabilities of
the Dresser Canada Retirement Income Plan. This $14,708,000
asset is not an asset of a member of a Company Group and
should not have been included in the Initial Financial
Statements. In computing Net Equity at the Initial Balance
Sheet Date, the Net Equity shall be reduced by $14,708,000,
but this reduction shall not be made to the Net Equity to be
determined as of either the Estimated Balance Sheet Date or
the Closing Balance Sheet Date. The Parent shall not be
entitled to make further adjustments to Net Equity reflected
in the Initial Balance Sheet (other than those adjustments
identified in this Agreement) after the date hereof. If it is
determined by the Acquiror during the period from the date
hereof to the date on which the Closing Balance Sheet is
delivered to the Parent that any liabilities reflected in the
Initial Balance Sheet are not liabilities of a member of a
Company Group or that any assets of a member of a Company
Group are not reflected in the Initial Balance Sheet, then the
Net Equity determined by reference to the Initial Balance
Sheet shall be increased to exclude such liabilities or to
include such assets up to $14,780,000 in order that they shall
have no effect on the Estimated Purchase Price Adjustment or
the Purchase Price Adjustment.
(c) No adjustments will be recorded in the Estimated Balance Sheet
or the Closing Balance Sheet related to the allocation of the
purchase price in connection with the acquisition of NIMCO.
(d) Solely for the purpose of determining Net Equity in
calculating the Estimated Purchase Price Adjustment and the
Purchase Price Adjustment, cash and cash equivalents (net of
the aggregate amount of (i) outstanding checks and overdrafts
drawn on bank accounts of all members of the Company Groups
and (ii) any notes payable by any member of either Company
Group) ("Net Cash") shall be deemed to be $11.5 million on the
Initial Balance Sheet notwithstanding the $23 million in Net
Cash actually reflected in the Initial Balance Sheet. No
adjustment shall be made to the actual Net Cash on the
Estimated Balance Sheet or Closing Balance Sheet.
(e) To the extent that Net Cash reflected in the Estimated Balance
Sheet or Closing Balance Sheet exceeds $11.5 million in
compliance with Section 11.03 (f), such excess will contribute
positively to any Purchase Price Adjustment calculation to the
benefit of the Parent.
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No other adjustments will be made to the Net Equity reflected in each
of the Initial Balance Sheet, the Estimated Balance Sheet or the Closing Balance
Sheet for the purpose of computing the Estimated Purchase Price Adjustments or
the Purchase Price Adjustment. Accordingly, any changes in the amounts of other
assets or liabilities reflected in the Estimated Balance Sheet or the Closing
Balance Sheet as compared with the Initial Balance Sheet will have an effect on
the Estimated Purchase Price Adjustment or the Purchase Price Adjustment or
both.
Section 2.11. Allocation of Purchase Price Adjustment. The Purchase
Price Adjustment shall be allocated among Dresser Industries and the Seller in
accordance with the Allocation Procedures of Annex D. Dresser Industries and the
Seller shall be deemed to hold that portion of the Purchase Price Adjustment
that it has theretofore received in constructive trust pending allocation of the
entire Purchase Price Adjustment in accordance with such Allocation Procedures.
Upon completion of the allocation, Dresser Industries and the Seller shall make
such payments of cash in U.S. Dollars as shall be necessary to give effect to
the allocation and the Parent shall, promptly after completion of the
allocation, provide to the Acquiror a copy of the allocation, together with
evidence, reasonably satisfactory to the Acquiror, of such payments.
Section 2.12. Amendments to Effect Recapitalization. The parties
acknowledge that certain amendments to the structure of the transactions
contemplated hereby may be necessary in order to record such transactions as a
Recapitalization for financial reporting purposes, as well as amendments to
provide for the adjustment of the Purchase Price to account for the retention of
equity by the Parent and the rollover of management equity, and the parties
shall cooperate in good faith to effect such amendments.
Section 2.13. Delayed Purchases. Notwithstanding any provisions to the
contrary herein,
(a) If at the time of the First Closing any of the Category 2A
Requirements applicable to the First Closing shall not have
been satisfied, the Acquiror may elect, in its sole
discretion, to delay the purchase of the Equity Securities of
the DEGI Group member located in such jurisdiction in which
such Category 2A Requirements shall not have been satisfied
until such time as such requirements have been satisfied;
provided that the Acquiror shall have given written notice to
the Parent of such election no later than ten (10) Business
Days prior to the Closing Date. In such event, (i) prior to
the First Closing, the Parent shall (A), if the assets subject
to delayed purchase have not theretofore been transferred to
the DEGI Group, cause a Retained Subsidiary to retain such
assets or, if the assets subject to delayed purchase have
theretofore been transferred to the DEGI Group, cause the
appropriate member of the DEGI Group to transfer such Equity
Securities to a member of the Parent Group; (ii) the
Preliminary Purchase Price and the Merger Consideration shall
be reduced by the dollar amount allocated to such Equity
Securities on Schedule 2.13 to the Parent's Disclosure Letter;
(iii) for any determination of Net Equity, the transfer of
such Equity Securities pursuant to this subsection (a) shall
be disregarded; and (iv) at the First Closing, the Acquiror
shall execute and deliver to the Parent a Purchase and Sale
Agreement, in form and substance substantially similar to the
form thereof attached hereto as Appendix IX.
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(b) If at the time of the Second Closing any of the Category 2A
Requirements applicable to the Second Closing shall not have
been satisfied, the Acquiror may elect, in its sole
discretion, to delay the purchase of the Equity Securities of
the BV Group member located in such jurisdiction in which such
Category 2A Requirements shall not have been satisfied until
such time as such requirements have been satisfied; provided
that the Acquiror shall have given written notice to the
Parent of such election no later than ten (10) Business Days
prior to the Closing Date. In such event, (i) prior to the
Second Closing, the Parent shall (A), if the assets subject to
delayed purchase have not theretofore been transferred to the
BV Group, cause a Retained Subsidiary to retain such assets
or, if the assets subject to delayed purchase have theretofore
been transferred to the BV Group, cause the appropriate member
of the BV Group to transfer such Equity Securities to a member
of the Parent Group; (ii) the Preliminary Purchase Price and
the BV Consideration shall be reduced by the dollar amount
allocated to such Equity Securities on Schedule 2.13 to the
Parent's Disclosure Letter; (iii) for any determination of Net
Equity, the transfer of such Equity Securities pursuant to
this subsection (b) shall be disregarded; and (iv) at the
Second Closing, the Acquiror shall execute and deliver to the
Parent a Purchase and Sale Agreement, in form and substance
substantially similar to the form thereof attached hereto as
Appendix IX.
(c) If the Equity Securities of any member of the DEGI Group or
the BV Group are subject to delayed purchase pursuant to
subsection (a) or (b) of this Section 2.13 and the operations
of such member are conducted in more than one jurisdiction,
the Parent and the Acquiror shall cooperate in amending Annex
B to preserve the assets of such member that are located in
any jurisdiction other than the Category 2A Jurisdiction
resulting in the delayed purchase.
Section 2.14. Joint Ventures.
(a) If prior to the First Closing, a third Person has, with
respect to its rights under any Contractual Transfer
Restrictions relating to any DEGI Joint Venture, (i) (A)
exercised a right to acquire the Equity Securities of the DEGI
Joint Venture owned indirectly by DEGI (giving effect to the
Reorganization), (B) failed to waive any such rights or (C)
failed to provide a required consent and (ii) consummation of
the transactions contemplated hereby would violate the terms
of such Contractual Transfer Restriction, then (x) such DEGI
Joint Venture shall be deemed not to be a member of the DEGI
Group; (y) the Preliminary Purchase Price and the Merger
Consideration shall be reduced by the dollar amount allocated
to such DEGI Joint Venture on Schedule 2.14 to the Parent's
Disclosure Letter; and (z) for any determination of Net
Equity, such DEGI Joint Venture shall be disregarded.
(b) If prior to the Second Closing, a third Person has, with
respect to its rights under any Contractual Transfer
Restrictions relating to any BV Joint Venture, (i) (A)
exercised a right to acquire the Equity Securities of the BV
Joint Venture owned indirectly by a BV Company (giving effect
to the Reorganization), (B) failed to waive any such
HALLIBURTON COMPANY
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rights or (C) failed to provide a required consent and (ii)
consummation of the transactions contemplated hereby would
violate the terms of such Contractual Transfer Restriction,
then (x) such BV Joint Venture shall be deemed not to be a
member of the BV Group; (ii) the Preliminary Purchase Price
and the BV Consideration shall be reduced by the dollar amount
allocated to such BV Joint Venture on Schedule 2.14 to the
Parent's Disclosure Letter; and (iii) for any determination of
Net Equity, such BV Joint Venture shall be disregarded.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING PARENT AND DRESSER
INDUSTRIES
Except as set forth in the Parent's Disclosure Letter and subject to
the limitations set forth in Section 12.01, the Parent represents and warrants
to the Acquiror that:
Section 3.01. Organization and Qualification. The Parent is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware, has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted. The Parent is duly qualified to do business as a foreign
corporation and is in good standing (in those jurisdictions in which the concept
of good standing is applicable) in each jurisdiction in which the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing could not reasonably be expected to affect materially and adversely the
Parent's ability to perform its obligations under this Agreement or any
Ancillary Agreement. Dresser Industries is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware, has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted and is duly qualified
to do business as a foreign corporation and is in good standing (in those
jurisdictions in which the concept of good standing is applicable) in each
jurisdiction in which the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified or in good standing could not reasonably be expected
to affect materially and adversely the Parent's ability to cause Dresser
Industries to consummate the transactions contemplated under this Agreement or
any Ancillary Agreement.
Section 3.02. Authorization of Agreement. The Parent has all requisite
corporate power and authority to execute and deliver this Agreement and each of
the Ancillary Agreements to which it will be a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by the Parent of this Agreement and each
of the Ancillary Agreements to which it will be a party and the performance by
the Parent of its obligations hereunder and thereunder have been duly and
validly authorized by all requisite corporate action on the part of the Parent.
No vote of, or consent by, the holders of any class or series of capital stock
or voting debt issued by the Parent is necessary to authorize the execution and
delivery by the Parent of this Agreement or any Ancillary Agreement to which it
will
HALLIBURTON COMPANY
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be a party or the performance by the Parent of its obligations hereunder or
thereunder. This Agreement has been, and each Ancillary Agreement to which the
Parent will be a party will at the First Closing have been, duly executed and
delivered by the Parent and (assuming due authorization, execution and delivery
hereof by the Acquiror and thereof by each other party thereto) constitutes or,
in the case of each such Ancillary Agreement, will at the First Closing
constitute the legal, valid and binding obligation of the Parent, enforceable
against the Parent in accordance with its terms, except as enforcement hereof or
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar Laws relating to or affecting the
enforcement of creditors' rights generally and legal principles of general
applicability governing the availability of equitable remedies (whether
considered in a proceeding in equity or at law or under applicable legal codes).
Section 3.03. Approvals. Except for (a) such filings and approvals as
may be required under the HSR Act, (b) other Regulatory Transfer Restrictions
and (c) applicable Legal Requirements, if any, noncompliance with which, in the
case of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent the Parent from performing this Agreement or any Ancillary
Agreement to which it will be a party in all material respects or to have a
Material Adverse Effect on the Businesses, no filing or registration with, no
waiting period imposed by, and no Authorization of, any Court or Governmental
Authority is required under any Legal Requirement applicable to the Parent or
any of its Affiliates (excluding the Seller and the members of the Company
Groups) to permit the Parent to execute, deliver or perform this Agreement or
any Ancillary Agreement to which it will be a party or to permit the Parent to
consummate the transactions contemplated hereby or thereby.
Section 3.04. No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, any Court or Governmental
Authority indicated as required pursuant to Section 3.03, neither the execution
and delivery by the Parent of this Agreement or any Ancillary Agreement to which
it will be a party nor the performance by the Parent of its obligations
hereunder or thereunder will (a) violate or breach the terms of or cause a
default or give rise to rights under any Contractual Transfer Restrictions under
(i) any Legal Requirement applicable to the Parent or Dresser Industries, (ii)
the Organizational Documents of the Parent or Dresser Industries, or (iii) any
contract or agreement to which the Parent or Dresser Industries is a party or by
which the Parent or Dresser Industries or any of their properties or assets is
bound (including any provision thereof requiring any Third Person Consents) or
(b), with the passage of time, the giving of notice or the taking of any action
by a third Person, have any of the effects set forth in clause (a) of this
Section, except for any matters described in clauses (a)(i) and (a)(iii) of this
Section that could not reasonably be expected, individually or in the aggregate,
to prevent the Parent from performing this Agreement or any Ancillary Agreement
to which it will be a party in all material respects or to have a Material
Adverse Effect on the Businesses.
Section 3.05. No Brokers. No broker, finder or investment banker (other
than Xxxxxx Xxxxxxx Xxxx Xxxxxx Incorporated) is entitled to any brokerage,
finder's or investment banking fee or commission in connection with the
transactions contemplated by this Agreement based upon
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arrangements made by or on behalf of the Parent or its Affiliates. All fees and
expenses of the Parent and its Affiliates incurred pursuant to the engagement of
Xxxxxx Xxxxxxx Xxxx Xxxxxx Incorporated will be discharged by the Parent.
Section 3.06. Title to Securities. Dresser Industries has, or after
giving effect to the Reorganization will have, directly or indirectly, good
title to the Equity Securities of each member of the DEGI Group indicated as
owned, directly or indirectly, by DEGI on Schedule 5.03(a) to the Parent's
Disclosure Letter, free and clear of any Liens, and there are no contracts,
agreements, commitments or arrangements of the Parent or any of its Subsidiaries
obligating Dresser Industries (other than pursuant to this Agreement and the
Reorganization) to sell or to offer to sell any Equity Securities of any such
member of the DEGI Group or to purchase or acquire, or to offer to purchase or
acquire, any outstanding Equity Securities of any such member of the DEGI Group.
Upon consummation of the transactions contemplated hereby, the Acquiror will
acquire good title to such Equity Securities to be acquired by Acquiror
hereunder directly or indirectly, free and clear of any such Liens (other than
any created by the Acquiror).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER
Except as set forth in the Parent's Disclosure Letter and subject to
the limitations set forth in Section 12.01, the Parent and the Seller, jointly
and severally, represent and warrant to the Acquiror that:
Section 4.01. Organization. The Seller is a legal entity duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation or organization and has all requisite
organizational power and authority to own, lease and operate its properties and
to carry on its business as it is now being conducted. The Seller is duly
qualified to do business as a foreign corporation and is in good standing (in
those jurisdictions in which the concept of good standing is applicable) in each
jurisdiction in which the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary in order for the
Seller to perform this Agreement and any Ancillary Agreement to which it is a
party in all material respects.
Section 4.02. Authorization of Agreement. The Seller has all requisite
organizational power and authority to execute and deliver this Agreement and
each Ancillary Agreement to which it will be a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby.
The execution and delivery by the Seller of this Agreement and each Ancillary
Agreement to which it will be a party and the performance by the Seller of its
obligations hereunder and thereunder have been duly and validly authorized by
all requisite organizational action on the part of the Seller and, to the extent
required by Law, Regulation or the Seller's Organizational Documents, by the
holder of the Seller's Equity Securities. This Agreement has been, and any
Ancillary Agreement to which it will be a party will at the Second Closing have
been, duly executed and delivered by the Seller and (assuming due authorization,
execution and delivery hereof by the Acquiror and of any Ancillary Agreement by
each Buyer) constitutes or, in the case
HALLIBURTON COMPANY
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of any such Ancillary Agreement, will at the Second Closing constitute the
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as enforcement hereof or thereof may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar Laws relating to or affecting the enforcement of
creditors' rights generally and legal principles of general applicability
governing the availability of equitable remedies (whether considered in a
proceeding in equity or at law or under applicable legal codes).
Section 4.03. Approvals. Except for (a) such filings and approvals as
may be required under the HSR Act, (b) other Regulatory Transfer Restrictions
and (c) applicable Legal Requirements, if any, noncompliance with which, in the
case of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent the Seller from performing this Agreement or any Ancillary
Agreement to which it will be a party in all material respects or to have a
Material Adverse Effect on the Businesses, no filing or registration with, no
waiting period imposed by, and no Authorization of, any Court or Governmental
Authority is required under any Legal Requirement applicable to the Seller to
permit the Seller to execute, deliver or perform this Agreement or any Ancillary
Agreement to which it will be a party or to consummate the transactions
contemplated hereby.
Section 4.04. No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, any Court or Governmental
Authority indicated as required pursuant to Section 4.03, neither the execution
and delivery by the Seller of this Agreement or any Ancillary Agreement to which
it will be a party nor the performance by the Seller of its obligations
hereunder or thereunder will (a) violate or breach the terms of or cause a
default or give rise to any rights under (i) any Legal Requirement applicable to
the Seller, or (ii) the Organizational Documents of the Seller, or (iii) any
contract or agreement to which such Seller is a party or by which it or any of
its properties or assets is bound (including any provisions thereof requiring
any Third Person Consents) or (b), with the passage of time, the giving of
notice or the taking of any action by a third Person, have any of the effects
set forth in clause (a) of this Section, except in any such case for any matters
described in clauses (a)(i) and (a)(iii) of this Section that could not
reasonably be expected, individually or in the aggregate, to prevent the Seller
from performing this Agreement or any Ancillary Agreement to which it will be a
party in all material respects or to have a Material Adverse Effect on the
Businesses.
Section 4.05. Title to Securities. The Seller has, or after giving
effect to the Reorganization will have, good title to the Equity Securities of
each BV Company to be sold by the Seller hereunder as provided on Annex C, free
and clear of any Liens, and there are no contracts, agreements, commitments or
arrangements of any Person obligating the Seller (other than pursuant to this
Agreement and the Reorganization) to sell or to offer to sell any Equity
Securities of any such BV Company or to purchase or acquire, or to offer to
purchase or acquire, any outstanding Equity Securities of any such BV Company.
Upon consummation of the transactions contemplated hereby, each Buyer will
acquire good title to the Securities to be purchased by such Buyer hereunder as
HALLIBURTON COMPANY
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provided on Annex B, free and clear of any such Liens (other than any created by
the Acquiror or such Buyer).
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING
MEMBERS OF THE COMPANY GROUPS
Except for the representations and warranties set forth in Sections
5.01, 5.02, and 5.03, to the extent that any of the representations and
warranties set forth in this Article V is made with respect to any member of a
Company Group that is a Non-Controlled Entity, the representation and warranty
is qualified as being given only to the Knowledge of the Parent. Each of the
representations and warranties contained in this Article V, other than those
made in subsection (b) of Section 5.02 but including those that are made only as
of the date hereof, gives effect to the Reorganization as if the Reorganization
had been effected on the date of this Agreement. Subject to the preceding
provisions of this Article V, to the matters set forth in the Parent's
Disclosure Letter and to the limitations set forth in Section 12.01, the Parent
and the Seller, jointly and severally, represent and warrant to the Acquiror
that:
Section 5.01. Organization; Subsidiaries.
(a) Each member of each Company Group is a legal entity duly
organized, validly existing and in good standing (in those
jurisdictions in which the concept of good standing is
applicable) under the Laws of its jurisdiction of
incorporation or organization and has all requisite
organizational power and authority to own, lease and operate
its properties and to carry on its business as it is now being
conducted, other than any matters that could not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect on the Businesses. Each member of each Company
Group is duly qualified to do business as a foreign
corporation or entity and is in good standing (in those
jurisdictions in which the concept of good standing is
applicable) in each jurisdiction in which the character of the
property owned or leased by it or the nature of its activities
makes such qualification necessary, except where any such
failure to be so qualified or in good standing, could not
reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect on the Businesses.
Schedule 5.01 of the Parent's Disclosure Letter sets forth a
true and complete list, as of the date of this Agreement, of
the members of each Company Group, together with (a) a
specification of the nature of the legal organization of each
such entity, (b) the jurisdiction of incorporation or other
organization of each such entity, (c) the magnitude (expressed
as a percentage of the aggregate ordinary voting power of all
outstanding Equity Securities of such legal entity) of the
direct or indirect equity investment of the Parent (and, if
different, the economic interest) in each such entity and (d)
the identity of the Business to be conducted by each member of
each Company Group after giving effect to the Reorganization.
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(b) To the extent that any member of a Company Group constitutes a
"Shelf Entity" in accordance with subsection (c) of Section
2.05, such Shelf Entity, immediately prior to the time it
became a member of a Company Group (i) was not a party to, and
had no liability or obligation under, any executory contract
or agreement, whether written or oral, and (ii) had no assets
or other liabilities or obligations (whether accrued, absolute
or otherwise).
Section 5.02. Organizational Documents; Authorization; No Violation.
(a) The Parent has heretofore made available to the Acquiror
complete and correct copies of the Organizational Documents,
in each case as amended or restated to the date hereof, of
each member of each Company Group. None of the members of
either Company Group is in violation of any of the provisions
of its Organizational Documents, except for any such
violations that could not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect on the
Businesses.
(b) At the time of the Reorganization, each member of each Company
Group will, to the extent required, have all requisite
organizational power and authority to consummate the
Reorganization and the other transactions contemplated to be
consummated by it by this Agreement, and the consummation of
the Reorganization and such other transactions will have been,
to the extent required, duly and validly authorized by all
requisite company action on the part of each such entity.
(c) The consummation of the Reorganization and the other
transactions contemplated by this Agreement will not (i)
violate or breach the terms of or cause a default or give rise
to rights under any Contractual Transfer Restrictions under
(A) any Legal Requirement applicable to any member of either
Company Group, (B) the Organizational Documents of any member
of either Company Group or (C) any contract or agreement to
which any member of either Company Group is a party or by
which it or its properties or assets are bound (including any
provision thereof requiring any Third Person Consent) or (ii),
with the passage of time, the giving of notice or the taking
of any action by a third Person, have any of the effects set
forth in clause (i) of this subsection (c), except for any
matters described in clauses (A) and (C) of clause (i) of this
subsection (c) that could not reasonably be expected,
individually or in the aggregate, to prevent any member of
either Company Group from consummating the Reorganization or
the other transactions contemplated by this Agreement in all
material respects or to have a Material Adverse Effect on the
Businesses.
Section 5.03. Capitalization.
(a) The authorized Equity Securities of each member of each
Company Group, the total outstanding Equity Securities of each
such Company Group member and the name of the record holders
of all the outstanding Equity Securities of each such Company
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Group member, in each case as of the date of this Agreement,
are as set forth in Schedule 5.03(a) of the Parent's
Disclosure Letter.
(b) No Equity Securities of any member of either Company Group are
reserved for issuance, and there are no outstanding options,
warrants, calls, pre-emptive rights, subscriptions or other
rights, contracts, agreements, commitments or arrangements
obligating any such Company Group member to offer, sell, issue
or grant any of its Equity Securities or to redeem, purchase
or acquire, or offer to purchase or acquire, any of its
outstanding Equity Securities.
(c) Except as required by this Agreement and the Reorganization,
there are no options, warrants, calls, pre-emptive rights,
subscriptions or other rights, contracts, agreements,
commitments or arrangements obligating any such Company Group
member (A) to offer, sell, issue, grant, pledge, dispose of or
encumber any Equity Securities of any other Company Group
member or (B) to purchase or acquire, or offer to purchase or
acquire, any outstanding Equity Securities of any other
Company Group member or (C) to grant any Lien on any
outstanding Equity Securities of any other Company Group
member.
(d) All the issued and outstanding Equity Securities of each
member of each Company Group that are owned directly or
indirectly by the Parent have been duly authorized and are
validly issued and, with respect to capital stock, are fully
paid and nonassessable. All such issued and outstanding Equity
Securities that are owned directly or indirectly by the Parent
are owned free and clear of all Liens.
(e) Except for matters contemplated by this Agreement or the
Ancillary Agreements and for revocable proxies, if any,
granted by any member of either Company Group with respect to
the capital stock of another Company Group member, there are
no voting trusts, proxies or other agreements, commitments or
understandings of any character to which any member of either
Company Group is a party or by which it is bound with respect
to the voting of any Equity Securities of any Company Group
member.
Section 5.04. Title to Properties.
(a) Schedule 5.04(a)(i) sets forth all of the Real Property owned
by any member of either Company Group and Schedule 5.04(a)(ii)
sets forth all of the Real Property leased by any member of
either Company Group other than any such leased Real Property
that is not individually or in the aggregate Material to the
Businesses. The appropriate member of each Company Group has
(i) good and marketable title to all of the Real Property
marked as "designated" (the "Designated Real Property") on
Schedule 5.04(a)(i) to the Parent's Disclosure Letter and (ii)
good and defensible title to the other properties reflected in
the Initial Financial Statements (other than, in the case of
this clause (ii), (A) any properties sold or otherwise
disposed of in the ordinary course of business since the
Initial Balance Sheet Date, and (B) any
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properties that are not material to the Businesses) free and
clear of Liens, other than (X) Liens securing debt, the
existence of which is reflected in the Initial Financial
Statements, (Y) Permitted Encumbrances and (Z) Liens that are
not, individually or in the aggregate, Material to the
Businesses. The appropriate member of each Company Group holds
under valid lease agreements (i) all Material Real Property
reflected in Schedule 5.04(a)(ii) to the Parent's Disclosure
Letter and (ii) all other properties reflected in the Initial
Financial Statements as being held under capitalized leases or
operating leases and enjoys peaceful and undisturbed
possession of such properties under such leases, other than,
in the case of clause (ii), (A) any properties as to which
such leases have terminated in the ordinary course of business
since the Initial Balance Sheet Date without any liability of
such Company Group member party thereto that is Material to
the Businesses and (B) any properties that are not,
individually or in the aggregate, Material to the Businesses.
Each such lease is valid and enforceable against the Company
Group member party thereto and, to the Knowledge of the
Parent, each other party thereto, in accordance with its terms
and there is not under any such lease any existing default by
the Company Group member party thereto or, to the Knowledge of
the Parent, any other party thereto, or any condition, event
or act which, with notice or lapse of time or action of a
third Person, would constitute such a default, except in each
case for matters that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect on the Businesses. Neither the Parent, the Seller nor
any Company Group member has received any written notification
of any adverse claim to the title to any properties owned by
such Company Group member or with respect to any lease under
which any properties are held by it, other than any claims
that could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the
Businesses.
(b) Schedule 5.04(b) to the Parent's Disclosure Letter sets forth,
as of the date hereof, to the extent material to a Business,
all Intellectual Property owned by or registered in the name
of any member of either Company Group or in which any such
entity has any rights including the name of the Company Group
member in whose name such Intellectual Property is registered
or which has such rights and the Business to which such
Intellectual Property relates. Except as could not reasonably
be expected to have a Material Adverse Effect on the
Businesses, as of the date hereof the members of the Company
Groups own, or have the valid right to use, all of the
Intellectual Property. Except as could not reasonably be
expected to have a Material Adverse Effect on the Businesses,
after giving effect to the Reorganization, the members of the
Company Groups which conduct each Business will own, or have
the valid right to use, all of the Intellectual Property used
in such Business.
Section 5.05. Financial Statements.
(a) The Initial Financial Statements (i) are attached as Schedule
5.05 to the Parent's Disclosure Letter, (ii) have been
prepared in accordance with U.S. GAAP
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consistently applied, (iii) fairly present the combined
financial position of the Businesses as of the respective
dates thereof and the combined results of operations of the
Businesses for the periods indicated and (iv) reflect all
material "loss contingencies" as determined under Statement of
Financial Accounting Standards No. 5 other than those for
which, at the time of preparation of the Initial Financial
Statements, the members of the Parent Group were expected to
be responsible after giving effect to the transactions
contemplated hereby.
(b) There exist no liabilities, obligations or commitments,
whether direct or indirect, absolute or contingent, of the
members of either Company Group that are Material to the
Businesses and that would be required to be reflected or
reserved for under U.S. GAAP in an historical combined balance
sheet of the members of the Company Groups, other than (i)
liabilities or obligations that are reflected or reserved for
in the Initial Financial Statements, (ii) liabilities or
obligations excluded from the Initial Financial Statements as
described in note 2 to such Initial Financial Statements,
(iii) liabilities or obligations incurred in the ordinary
course of business of the Businesses since the Initial Balance
Sheet Date and (iv) liabilities or obligations incurred since
the Initial Balance Sheet Date of the nature of liabilities
that may be incurred after the date of this Agreement pursuant
to subsection (b) of Section 8.02. None of the liabilities
described in clauses (iii) and (iv) of the preceding sentence
has or could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Businesses.
(c) The books, records and accounts of the members of the Company
Groups, in reasonable detail, accurately and fairly reflect in
the aggregate the transactions and dispositions of the assets
of the Businesses. No member of either Company Group has
engaged in any Material transaction, maintained any Material
bank account or used any Material corporate funds except for
transactions, bank accounts and funds that have been and are
reflected in the normally maintained Books and Records of such
member of either Company Group.
(d) The notes to the Initial Financial Statements fairly reflect
in all material respects all transactions between or among any
member of either Company Group and any Affiliate thereof
(other than transactions solely between or among the members
of the Company Groups).
Section 5.06. Authorizations. Each member of each Company Group has
obtained all Authorizations that are necessary to carry on the Business related
thereto as currently conducted, except for any such Authorizations that its
failure to possess, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Businesses. Each such
Authorization (i) is in full force and effect, (ii) has not been violated in any
respect and (iii) is not subject to any suspension, revocation or cancellation,
other than for matters, in any such case, that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Businesses. There is no action, proceeding or investigation pending or, to the
Knowledge of the Parent, threatened regarding suspension, revocation or
cancellation of any of such Authorizations, except in any circumstances in which
the suspension, revocation or cancellation of such
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Authorizations could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the Businesses.
Section 5.07. Compliance With Laws; Regulation of Businesses. Each
member of each Company Group is and, to the extent that any noncompliance could
reasonably be expected to have current consequences, has been in compliance with
all applicable Laws and Regulations and any Orders applicable to any such
entity, other than Environmental Laws and, to the extent applicable to the
execution, delivery and performance of this Agreement, foreign competition Laws
and except such events of noncompliance or defaults that, individually or, with
respect to multiple events of noncompliance or defaults arising out of the same
facts or circumstances, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on the Businesses. To the Knowledge of the
Parent, each member of each Company Group has at all times been in compliance
with, and continues to comply with, the Foreign Corrupt Practices Act of 1977,
as amended.
Section 5.08. Taxes. Except for any matter that could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect on
the Businesses:
(a) (i) all Tax Returns that were required to be filed by or with
respect to any member of a Company Group, or any member of the
Parent Group insofar as it affects any member of a Company
Group, have been duly and timely filed, (ii) all items of
income, gain, loss, deduction and credit or other items ("Tax
Items") required to be included in each such Tax Return have
been so included and all such Tax Items and any other
information provided in each such Tax Return are true, correct
and complete insofar as such items are related to or affect a
member of a Company Group, (iii) all Taxes shown as due on
each such Tax Return have been timely paid in full insofar as
such Taxes are related to or affect a member of a Company
Group, (iv) insofar as such items are related to or affect a
member of a Company Group, 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 and (v)
all Tax withholding and deposit requirements imposed on or
with respect to any member of a Company Group, or any member
of the Parent Group insofar as it affects any member of a
Company Group, have been satisfied in full in all respects;
(b) no member of a Company Group (or the Parent Group insofar as
it affects any member of a Company Group) has in force any
waiver of any statute of limitations in respect of Taxes or
any extension of time with respect to a Tax assessment or
deficiency;
(c) there are no pending Tax audits or examinations and no
proposed deficiencies or other claims for unpaid Taxes of any
member of a Company Group for which written notice has been
received;
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(d) Schedule 5.08(d) to the Parent's Disclosure Letter contains a
list as of the date hereof of (i) all tax allocation or
sharing agreements to which any member of either Company Group
is a party and (ii) each member of a Company Group that has
any liability for the Taxes of any other Person (other than
members of its respective Company Group) under United States
Treasury Regulation section 1.1502-6 (or any similar provision
of state, local or foreign law);
(e) the aggregate unpaid Taxes of all members of the Company
Groups (computed with respect to each such member on the basis
of the income, operations and activities of such member
through the Closing Date as if the applicable taxable year of
such member ended on the Closing Date) did not, as of the date
of the Closing, exceed the amounts reserved for Tax liability
(as distinguished from any reserve for deferred taxes
established to reflect timing differences between book and tax
income) in the reserve for Taxes set forth on the face of
(rather than in any notes to) the Closing Financial
Statements;
(f) none of the assets of any member of any Company Group is
property required to be treated as being owned by any other
Person pursuant to the "safe harbor lease" provisions of
former Section 168(f)(8) of the Code;
(g) none of the assets of any member of any Company Group directly
or indirectly secures any debt the interest on which is
tax-exempt under Section 103(a) of the Code;
(h) none of the assets of any member of any Company Group is
"tax-exempt use property" within the meaning of Section 168(h)
of the Code;
(i) each member of each Company Group that is not a corporation is
properly classified for United States federal income tax
purposes as a partnership or a disregarded entity, and not as
an association or publicly traded partnership taxable as a
corporation. No member of a Company Group is a party to any
joint venture, partnership, limited liability company
agreement, or other arrangement or contract that could be
treated as a partnership for federal income tax purposes;
(j) the Parent is the common parent of the affiliated group within
the meaning of Section 1504(a) of the Code that includes
Dresser Industries and each member of the DEGI Group that is a
domestic corporation;
(k) the Parent is eligible to make an election under Section
338(h)(10) of the Code (and any comparable election under
state, local or foreign tax law) with respect to each member
of each Company Group that is a domestic corporation; and
(l) no claim has been made by a jurisdiction where any member of
any Company Group does not file Tax Returns or otherwise
comply with local taxation requirements (e.g.,
HALLIBURTON COMPANY
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through a withholding tax regime) that such member is or may
be subject to taxation in that jurisdiction.
Section 5.09. Principal Contracts.
(a) Schedule 5.09(a) to the Parent's Disclosure Letter contains a
list as of the date hereof of all Principal Contracts, other
than Related Party Contracts and Surety Arrangements,
including the name of the Company Group member that is a party
thereto and the Business to which each such Principal Contract
relates. Each such Principal Contract is in full force and
effect, and neither the member or members of either Company
Group party thereto nor, to the Knowledge of Parent, any other
party thereto, has failed to perform its obligations
thereunder to date, other than any failure of a Principal
Contract to be in full force and effect or of any
nonperformance thereof that could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect on the Businesses. To the Knowledge of the Parent, no
party to any such Principal Contract has given or received any
notice of cancellation or termination of such Principal
Contract.
(b) Schedule 5.09(b) to the Parent's Disclosure Letter contains a
list as of the date hereof of all Principal Contracts that are
Related Party Contracts, including the name of each Company
Group member that is a party thereto and the Business to which
each such Related Party Contract relates, and identifies each
Retained Subsidiary of the Parent that is the party to each
such Related Party Contract. Each Related Party Contract is in
full force and effect and each party thereto has performed its
obligations thereunder to date.
(c) Schedule 5.09(c) to the Parent's Disclosure Letter contains a
list as of the date hereof of all Surety Arrangements,
including the name of each Company Group member that is a
beneficiary thereof and the Business to which the Surety
Arrangement relates, and identifies each surety in such
arrangement, whether that be the Parent or a Retained
Subsidiary. To the Knowledge of the Parent, all such Surety
Arrangements are in full force and effect, no Parent or
Retained Subsidiary is in default thereunder and no party to
any Surety Arrangement has given or received any notice of
cancellation or termination of any Surety Arrangement.
Section 5.10. Employees.
(a) Except for matters that could not reasonably be expected to
have a Material Adverse Effect on the Businesses, (i) no
collective bargaining or similar agreement is being negotiated
by any member of either Company Group, (ii) there is no
pending or, to the Knowledge of the Parent, threatened labor
dispute, strike, slowdown, lockout or work stoppage against
any member of either Company Group, (iii) none of the members
of the Company Groups is a party to or bound by any collective
bargaining or similar agreement with any union or work rules
or practices agreed to with any
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labor organization or employee association applicable to
employees of any member of either Company Group, (iv) none of
the employees of any member of either Company Group is
represented by any labor organization and, to the Knowledge of
the Parent, there are no current union organizing activities
among the employees of any member of either Company Group and
(v), to the Knowledge of the Parent, no member of either
Company Group is engaged in any unfair labor practice in
connection with the operation of the related Business, which
unfair labor practice is actionable under applicable Laws and
Regulations. Except for matters that could not reasonably be
expected to have a Material Adverse Effect on the Businesses,
since January 1, 1998, none of the members of either Company
Group has (A), without fully complying with the notice and
other requirements of the WARN Act, effectuated (i) a "plant
closing" (as defined in the WARN Act) affecting any site of
employment or one or more facilities or operating units within
any site of employment or facility of any such Company Group
member covered by the WARN Act or (ii) a "mass layoff" (as
defined in the WARN Act) affecting any site of employment or
facility of any such Company Group member covered by the WARN
Act; or (B) engaged in layoffs or employment terminations
sufficient to imply application of any foreign, state or local
Laws or Regulations relating to plant closing or mass layoffs
and requiring notice to employees in the event thereof without
complying with such Laws and Regulations.
(b) Schedule 5.10(b) to the Parent's Disclosure Letter sets forth
as of the date hereof a true and complete list of the
Significant Benefit Plans. Schedule 5.10(b) to the Parent's
Disclosure Letter also identifies which of the Significant
Benefit Plans constitute Parent Benefit Plans. The Parent has
made available to the Acquiror copies of all Significant
Benefit Plans and, for each such Significant Benefit Plan,
copies of (i) the most recent annual report (if any) required
to be filed with an applicable Governmental Authority, (ii) a
copy of the most recent actuarial report and valuation of the
assets and liabilities subject thereto to the extent that any
such report or valuation is required to be prepared by
applicable Laws and Regulations, (iii) a copy of the
organizational documents relating to any funding vehicle
established thereunder and a copy of the summary plan
description (if any) therefor, (iv) where applicable, the most
recent determination letter issued by the Internal Revenue
Service, (v) a complete description of any unwritten
Significant Benefit Plans, and (vi) summary plan descriptions,
summaries of material modifications, and any other material
communications distributed to participants. Except for the
Parent Benefit Plans, no Person that is not a member of a
Company Group is a participating employer or sponsor of any
Significant Benefit Plan. The Parent has made available to the
Acquiror copies of any retention agreements with any
management employees of any member of either Company Group
that were executed in contemplation of the transactions that
are the subject of this Agreement.
(c) Except for matters that, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse
Effect on the Businesses:
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(i) no Benefit Plan is subject to section 412 of the
Code, section 302 of ERISA or Title IV of ERISA, and
each Benefit Plan intended to be qualified under
section 401(a) of the Code (A) satisfies in form the
requirements of such section except to the extent
amendments are not required by law to be made until a
date after the Closing Date and (B) has received a
favorable determination letter from the Internal
Revenue Service regarding such qualified status;
(ii) each Benefit Plan has been operated and administered
in compliance with its governing documents and all
applicable Legal Requirements;
(iii) each member of each Company Group has performed all
obligations, whether arising by Legal Requirement or
by contract, required to be performed by it in
connection with the Benefit Plans;
(iv) there are no actions, suits or claims pending (other
than routine claims for benefits) or, to the
Knowledge of the Parent, threatened against, or with
respect to, any of the Benefit Plans or their assets;
(v) all contributions required to be made to the Benefit
Plans pursuant to their terms and the provisions of
all applicable Legal Requirements have been timely
made;
(vi) other than routine applications, filings and
amendments and modifications, there is no matter
pending with respect to any of the Benefit Plans
before any Governmental Authority;
(vii) each member of each Company Group is in substantial
compliance with all applicable Legal Requirements
mandating benefits for their employees;
(viii) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby
will not (except as otherwise provided in this
Agreement or pursuant to the terms of a Benefit Plan
as in effect on the date of this Agreement) (A)
require any member of either Company Group to make a
larger contribution to, or pay greater benefits or
accelerate vesting or other rights or provide other
rights under, any Benefit Plan than it otherwise
would, whether or not some other subsequent action or
event would be required to cause such payment or
provision to be triggered or (B) create or give rise
to any additional vested rights or service credits or
accruals under any such Benefit Plan;
(ix) in connection with the consummation of the
transactions contemplated by this Agreement, no
payment of money or other property, acceleration of
benefits or provision of other rights has been or
could be made under this Agreement, any Ancillary
Agreement, any Benefit Plan or otherwise that would
be reasonably likely to be nondeductible for United
States federal income tax purposes by any member of
either Company Group that is a United States person
(within the meaning of section 7701(a)(30) of the
Code) solely by virtue of section 162(m) or section
280G of the Code or that would be
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reasonably likely to be an "excess parachute payment"
pursuant to Section 280G of the Code or that would be
an "excess parachute payment," but for the
application of Section 280G(b)(5) of the Code;
(x) to the Knowledge of the Parent neither any member of
either Company Group nor any fiduciary of any Benefit
Plan has engaged in any transaction in violation of
Sections 404 or 406 of ERISA or any non-exempt
"prohibited transaction" as defined in Section
4975(c)(i) of the Code, or has otherwise violated the
provisions of Part 4 of Title I, Subtitle B of ERISA,
and, to the Knowledge of the Parent, no member of
either Company Group has knowingly participated in a
violation of Part 4 of Title I, Subtitle B of ERISA
by any fiduciary of a Benefit Plan (or other employee
benefit plan subject to ERISA) and, to the Knowledge
of the Parent, no member of either Company Group has
been assessed any civil penalty under Section 502(a)
of ERISA of a material amount which has not been paid
in full or accrued as a liability in the financial
statements;
(xi) except pursuant to one or more of those Significant
Benefit Plans set forth on Schedule 5.10(b) to the
Parent's Disclosure Letter, none of the Parent,
either Company Group, or any Benefit Plan has any
present or future obligation to provide any benefits
to or make any payment with respect to any current or
former employee, director, officer, consultant or
agent of any Company Group pursuant to any
Significant Benefit Plan that is a retiree medical
benefit plan or other retiree welfare plan and no
condition exists that would prevent the Parent or
either Company Group from amending or terminating any
such plan;
(xii) to the Knowledge of the Parent, each Benefit Plan
that is a "group health plan" has been operated in
all Material respects in compliance with the
provisions of Part 6 of Title I, Subtitle B;
(xiii) to the Knowledge of the Parent, neither the Parent
nor any member of either Company Group nor any ERISA
Affiliate has announced, proposed, or agreed to any
changes to any Benefit Plan that would cause an
increase in benefits (or the creation of new
benefits) under any such Benefit Plan or that would
cause a material increase in the cost of maintaining
such Benefit Plan with respect to a Company Group;
and
(xiv) to the Knowledge of the Parent, each Benefit Plan
that covers current or former employees, directors,
officers or consultants and that is not subject to
ERISA and the Code has been maintained in material
compliance with its
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terms and with the requirements prescribed by any and
all applicable statutes, orders, rules and
regulations (including any special provisions
relating to the tax status of contributions to,
earnings of or distributions from such Benefit Plans
where each such Benefit Plan was intended to have tax
status) and has been maintained in good standing with
applicable statutes, orders, rules and regulations
(including any special provisions relating to the tax
status of contributions to, earnings of or
distributions from such Benefit Plans where each such
Benefit Plan was intended to have tax status) and has
been maintained in good standing with applicable
regulatory authorities.
(d) There does not now exist, nor do any circumstances exist that
could result in, any Controlled Group Liability of the Parent
or any of its ERISA Affiliates that could reasonably be
expected to become a liability of any member of either Company
Group following the First Closing. No liability under Title IV
of ERISA (including liabilities pursuant to Sections 4064,
4069 or 4204 of ERISA) has been incurred by any member of
either Company Group since the effective date of ERISA that
has not been satisfied in full and no such liability is
reasonably expected to arise with respect to any member of
either Company Group. To the extent that the representation in
the preceding sentence applies to any section of ERISA
pursuant to which either Controlled Group could have liability
with respect to an ERISA Affiliate, it is made not only with
respect to the Benefit Plans but also with respect to any
employee benefit plan subject to Title IV of ERISA to which
any member of either Company Group or any ERISA Affiliate
made, or was required to make, contributions during the
six-year period preceding the date of this Agreement. The
Pension Benefit Guaranty Corporation has not instituted
proceedings pursuant to section 4042 of ERISA to terminate any
of the Benefit Plans subject to Title IV of ERISA or, to the
Knowledge of the Parent, any plan maintained by any other
entity that would be considered a single employer with any
member of either Company Group pursuant to section 4001(b)(1)
of ERISA. As to any Benefit Plan subject to Title IV of ERISA,
there has been no "reportable event" (as defined in Section
4043(c) of ERISA and the regulations under such section and
for which the disclosure requirements of Regulation section
4043.1 et. seq., promulgated by the Pension Benefit Guaranty
Corporation, have not been waived) and no member of the
Company Groups nor Parent nor any ERISA Affiliate is subject
to Section 4043(b) of ERISA and no analogous event has
occurred under applicable foreign law. Within the past six
years, neither any Benefit Plan nor any other plan maintained
by any entity that would be considered a single employer with
any member of either Company Group pursuant to section
4001(b)(1) of ERISA is or was a "multiemployer plan" (as such
term is defined in section 3(37) of ERISA).
Section 5.11. Environmental Matters. Notwithstanding anything to the
contrary in this Article V or in any other section of this Agreement, the
representations and warranties set forth in this Section 5.11 are the only
representations and warranties thereof of the Parent in any way relating to
environmental matters, including the Environmental Laws, Authorizations under
any Environmental Laws and Hazardous Materials, and the remaining
representations and warranties in
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this Agreement shall be construed not to apply to such matters. Employee health
and safety matters are covered by Section 5.07. Except for matters that could
not reasonably be expected to have a Material Adverse Effect on the Businesses,
Schedule 5.11 to the Parent's Disclosure Letter sets forth:
(a) to the Knowledge of the Parent, all Hazardous Materials
Contamination on, about or under the Real Property as of the
date of this Agreement;
(b) to the Knowledge of the Parent, all Environmental Compliance
Matters related to the Businesses as of the date of this
Agreement;
(c) all existing, pending or, to the Knowledge of the Parent,
threatened actions, suits, investigations, CERCLA potentially
responsible party notices, inquiries and proceedings by or
before any Court or Governmental Authority under any
applicable Environmental Laws as of the date of this Agreement
against any member of either Company Group; and
(d) Schedule 5.11 to the Parent's Disclosure Letter includes a
listing of all the environmental site assessment reports
prepared in connection with the transactions contemplated
hereby, all of which have heretofore been delivered to the
Acquiror.
Section 5.12. Litigation. There are no actions, suits, arbitrations,
proceedings or investigations pending or, to the Knowledge of the Parent,
threatened against the Parent, the Seller or any member of either Company Group,
including any involving a claim for indemnification pursuant to any statute,
Organizational Document or contract relating to any other action, suit,
arbitration, proceeding or investigation, in or before any Court or before or by
any Governmental Authority, except actions, suits, proceedings or investigations
as disclosed in the Parent's Disclosure Letter pursuant to Section 5.07, 5.10 or
5.11 or that, individually or, with respect to multiple actions, suits or
proceedings that allege similar theories of recovery based on the same or
substantially the same facts or occurrences, in the aggregate, could not
reasonably be expected, in the case of any member of either Company Group, to
have a Material Adverse Effect on the Businesses or, in the case of any of the
Parent or the Seller, to prevent, enjoin or delay materially the performance of
this Agreement, and the Parent has no Knowledge of any facts which could give
rise to any such action, suit, arbitration, proceeding or investigation. Neither
the Parent nor the Seller nor any member of either Company Group is subject to
any judgment, injunction, order, ruling or decree that could reasonably be
expected, individually or in the aggregate, in the case of any member of either
Company Group, to have a Material Adverse Effect on the Businesses or, in the
case of the Parent or the Seller, to prevent or enjoin or delay materially the
performance of this Agreement.
Section 5.13. Material Adverse Changes.
(a) Since the Initial Balance Sheet Date, no event, condition or
circumstance has occurred resulting in any change in or effect
on any Business (except for (i) such changes or effects
resulting from changes in general economic, regulatory or
political conditions (including foreign exchange rate
movements or devaluations), (ii) such
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changes or effects affecting generally the industry in which
such Business participates and (iii) any such changes or
effects disclosed in the Parent's Disclosure Letter pursuant
to any other representation or warranty contained in this
Article V) that has had or could reasonably be expected to
constitute or have a Material Adverse Effect on the
Businesses.
(b) During the period from the Initial Balance Sheet Date to the
date of this Agreement, no member of either Company Group has
engaged in any conduct that is proscribed during the period
from the date of this Agreement to the Closing Date by clauses
(i) through (xvi) of subsection (b) of Section 8.02.
Section 5.14. Customers and Suppliers. Schedule 5.14 to the Parent's
Disclosure Letter sets forth a true and correct list of (a) the 20 largest
customers of each Business, in terms of sales during each of the fiscal years
ended December 31, 1999 and 2000, setting forth the total sales to each such
customer during such period and (b) the 10 largest suppliers of each Business,
in terms of purchases during each of the fiscal years ended December 31, 1999
and 2000, setting forth for each such supplier the total purchases from each
such supplier during such period. Since the Initial Balance Sheet Date, to the
Knowledge of the Parent, there has not been any change in the business
relationship of the relevant members of either Company Group with any customer
or supplier named in Schedule 5.14 to the Parent's Disclosure Letter that could
reasonably be expected to have a Material Adverse Effect on the Businesses.
Section 5.15. Adequacy of Assets. The assets and properties of the
members of the Company Groups constitute all of the assets, rights and
properties that are necessary for the conduct of the Businesses as now
conducted.
Section 5.16. Full Disclosure. The Acquiror shall be entitled to rely
upon, and shall not be deemed to have knowledge of facts other than those set
forth in, the representations and warranties of the Parent and the Seller made
in this Agreement (including the Schedules to the Parent's Disclosure Letter
related hereto) and in the certificates delivered by or on behalf of the Parent
and the Seller confirming the accuracy of such representations and warranties
and pursuant to any disclosures in writing made to the Acquiror pursuant to
Section 12.02(c).
Section 5.17. Disclaimers. THE ACQUIROR ACKNOWLEDGES THAT EXCEPT AS
EXPRESSLY PROVIDED IN THIS AGREEMENT THE PARENT HAS NOT MADE, AND THE PARENT
HEREBY EXPRESSLY DISCLAIMS AND NEGATES, AND THE ACQUIROR HEREBY EXPRESSLY
WAIVES, ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY
STATUTE OR OTHERWISE RELATING TO, AND THE ACQUIROR HEREBY EXPRESSLY WAIVES AND
RELINQUISHES ANY AND ALL RIGHTS, CLAIMS AND CAUSES OF ACTION AGAINST THE PARENT
AND ITS REPRESENTATIVES IN CONNECTION WITH, THE ACCURACY, COMPLETENESS OR
MATERIALITY OF ANY INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL),
HERETOFORE FURNISHED TO THE ACQUIROR AND ITS REPRESENTATIVES BY OR ON BEHALF OF
THE PARENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE PARENT EXPRESSLY
DISCLAIMS AND NEGATES, AND THE ACQUIROR HEREBY WAIVES, AS TO PERSONAL PROPERTY,
EQUIPMENT AND FIXTURES CONSTITUTING A PART OF THE ASSETS OWNED OR OPERATED BY
THE BUSINESSES, (I) ANY IMPLIED
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OR EXPRESS WARRANTY OF MERCHANTABILITY, (II) ANY IMPLIED OR EXPRESS WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE, (III) ANY IMPLIED OR EXPRESS WARRANTY OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (IV) ANY RIGHTS OF PURCHASERS
UNDER APPROPRIATE LEGAL REQUIREMENTS TO CLAIM DIMINUTION OF CONSIDERATION, (V)
ANY CLAIMS BY ACQUIROR FOR DAMAGES BECAUSE OF ANY LATENT OR PATENT DEFECTS OR
OTHER DEFECTS, WHETHER KNOWN OR UNKNOWN AND (VI) ANY AND ALL IMPLIED WARRANTIES
EXISTING UNDER APPLICABLE LEGAL REQUIREMENTS; IT BEING THE EXPRESS INTENTION OF
THE PARENT AND THE ACQUIROR THAT, EXCEPT AS EXPRESSLY PROVIDED ELSEWHERE IN THIS
AGREEMENT, THE TANGIBLE PROPERTY, INCLUDING REAL PROPERTY, IMMOVABLES, PERSONAL
PROPERTY, MOVABLES, EQUIPMENT AND FIXTURES OWNED BY OR IN THE POSSESSION OF THE
SELLER OR ANY MEMBER OF EITHER COMPANY GROUP ARE TO BE CONVEYED IN THEIR THEN
PRESENT CONDITION AND STATE OF REPAIR, "AS IS" AND "WHERE IS" WITH ALL FAULTS.
THE PARENT AND THE ACQUIROR AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE
LEGAL REQUIREMENTS TO BE EFFECTIVE, THE DISCLAIMERS OF THE WARRANTIES CONTAINED
IN THIS SECTION ARE "CONSPICUOUS."
ARTICLE VI
REPRESENTATIONS AND WARRANTIES REGARDING ACQUIROR
Subject to the matters set forth in the Acquiror's Disclosure Letter
and to the limitations set forth in Section 12.01, the Acquiror represents and
warrants to the Parent that:
Section 6.01. Organization and Qualification. The Acquiror is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted. The Acquiror is duly qualified to do business as a foreign
company and is in good standing (in those jurisdictions in which the concept of
good standing is applicable) in each jurisdiction in which the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing could not reasonably be expected to prevent the Acquiror from
performing this Agreement and each Ancillary Agreement in all material respects.
Section 6.02. Authorization of Agreement. The Acquiror has all
requisite corporate power and authority to execute and deliver this Agreement
and each of the Ancillary Agreements, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by the Acquiror of this Agreement and each of the
Ancillary Agreements and the performance by the Acquiror of its obligations
hereunder and thereunder have been duly and validly authorized by all requisite
company action on the part of the Acquiror. This Agreement has been, and each
Ancillary Agreement will at the First Closing have been, duly executed and
delivered by the Acquiror and (assuming due authorization, execution and
delivery hereof by the Parent and thereof by each other party thereto)
constitutes or, in the case of the Ancillary Agreements, will at the First
Closing constitute the legal, valid and binding obligation of the Acquiror,
enforceable against the Acquiror in accordance with its terms, except as
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enforcement hereof or thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws
relating to or affecting the enforcement of creditors' rights generally and
legal principles of general applicability governing the availability of
equitable remedies (whether considered in a proceeding in equity, at law or
under applicable legal codes).
Section 6.03. Approvals. Except for (a) such filings and approvals as
may be required under the HSR Act, (b) other Regulatory Transfer Restrictions
and (c) applicable Legal Requirements, if any, noncompliance with which, in the
case of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent the Acquiror from performing this Agreement or the
Ancillary Agreements in all material respects, no filing or registration with,
no waiting period imposed by, and no Authorization of, any Governmental
Authority is required under any Legal Requirement applicable to the Acquiror to
permit the Acquiror to execute, deliver or perform this Agreement or the
Ancillary Agreements or to consummate the transactions contemplated hereby.
Section 6.04. No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, each Court and Governmental
Authority indicated as required pursuant to Section 6.03, neither the execution
and delivery by the Acquiror of this Agreement or any Ancillary Agreement nor
the performance by the Acquiror of its obligations hereunder or thereunder will
(a) violate or breach the terms of or cause a default under (i) any Legal
Requirement applicable to the Acquiror, (ii) the Organizational Documents of the
Acquiror or (iii) any contract or agreement to which the Acquiror or any of its
Subsidiaries is a party or by which it or any of its properties or assets is
bound (including any provision thereof requiring any Third Person Consent) or
(b), with the passage of time, the giving of notice or the taking of any action
by a third Person, have any of the effects set forth in clause (a) of this
Section, except for any matters described in this Section that could not
reasonably be expected to prevent the Acquiror from performing this Agreement
and the Ancillary Agreements in all material respects.
Section 6.05. Commitment Letters. The Acquiror has delivered to the
Parent true and complete copies of the Commitment Letters. The Commitment
Letters have not been amended or modified and are in full force and effect.
Section 6.06. No Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or investment banking fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Acquiror.
Section 6.07. Transitory Merger Sub. Transitory Merger Sub is not and
has never been a party to any material agreements and has not conducted any
activities other than in connection with its organization, the negotiation and
execution of the Merger Agreement, the Loan, the Investment and the consummation
of the transactions contemplated hereby. Transitory Merger Sub has no
Subsidiaries.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES REGARDING BUYERS
Each of the representations and warranties contained in this Article
VII gives effect to the Reorganization as if the Reorganization had been
effected on the date of this Agreement. Subject to the limitations set forth in
Section 12.01, each of the Parent and the Acquiror represents and warrants to
the other as of the Second Closing that:
Section 7.01. Organization. Each Buyer is a legal entity duly
organized, validly existing and in good standing (if the concept of good
standing is applicable in that jurisdiction) under the Laws of its jurisdiction
of incorporation or organization, and has all requisite organizational power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted.
Section 7.02. Authorization of Agreement. Each Buyer has all requisite
organizational power and authority to execute and deliver the Ancillary
Agreements, to perform its obligations thereunder and to consummate the
transactions contemplated thereby. The execution and delivery by each Buyer of
each Ancillary Agreement to which it is a party and the performance by such
Buyer of its obligations thereunder have been duly and validly authorized by all
requisite organizational action on the part of such Buyer and, to the extent
required by Law, Regulation or such Buyer's Organizational Documents, by the
holder or holders of such Buyer's Equity Securities. Each Ancillary Agreement to
which it is a party will at the Second Closing have been duly executed and
delivered by each Buyer and (assuming due authorization, execution and delivery
thereof by each other party thereto) at the Second Closing each Ancillary
Agreement to which it is a party will constitute the legal, valid and binding
obligation of such Buyer, enforceable against such Buyer in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws
relating to or affecting the enforcement of creditors' rights generally and
legal principles of general applicability governing the availability of
equitable remedies (whether considered in a proceeding in equity, at law or
under applicable legal codes).
Section 7.03. Approvals. Except for (a) such filings and approvals as
may be required under the HSR Act, (b) other Regulatory Transfer Restrictions
and (c) applicable Legal Requirements, if any, noncompliance with which, in the
case of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent any Buyer from performing any Ancillary Agreement to which
it is a party in all material respects, no filing or registration with, no
waiting period imposed by and no Authorization of, any Governmental Authority or
Court is required under any Legal Requirement applicable to such Buyer to permit
such Buyer to execute, deliver or perform each Ancillary Agreement to which it
is a party or to consummate the transactions contemplated thereby.
Section 7.04. No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, any Court or Governmental
Authority indicated as required pursuant to
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Section 7.03, neither the execution and delivery by any Buyer of any Ancillary
Agreement to which it is a party nor the performance by the Buyer of its
obligations thereunder will (a) violate or breach the terms of or cause a
default under (i) any Legal Requirement applicable to such Buyer, (ii) the
Organizational Documents of such Buyer or (iii) any contract or agreement to
which such Buyer is a party or by which it or any of its properties or assets is
bound or (b), with the passage of time, the giving of notice or the taking of
any action by a third Person, have any of the effects set forth in clause (a) of
this Section 7.04, except in any such case for any matters described in this
Section 7.04 that could not reasonably be expected to prevent such Buyer from
performing each Ancillary Agreement to which it is a party in all material
respects.
Section 7.05. Investment in Securities. Each Buyer is acquiring the
Securities to be purchased by it for its own account and not with a view to a
distribution thereof within the meaning of that term as used in the U.S.
Securities Act of 1933 (the "Securities Act").
ARTICLE VIII
COVENANTS OF THE PARENT
Section 8.01. Affirmative Covenants Regarding Operation of the
Businesses.
(a) The Parent and the Seller, jointly and severally, hereby
covenant and agree that, from the date hereof to the Closing
Date, except as set forth in Schedule 8.01(a) to the Parent's
Disclosure Letter, as otherwise contemplated by this Agreement
or as approved in writing by the Acquiror, they will cause
each member of each Company Group (other than any
Non-Controlled Entity):
(i) to operate in the usual and ordinary course
consistent with past practices;
(ii) to use all commercially reasonable efforts to
preserve substantially intact its business
organization and goodwill, to maintain its rights,
privileges and immunities, to retain the services of
its key employees (subject to work force requirements
and compliance with the Parent's normal employee
policies), to perform in all material respects the
Principal Contracts to which it is a party and to
maintain its relationships with its customers,
regulators, and suppliers;
(iii) to use all commercially reasonable efforts consistent
with past practice to maintain and to keep its
properties and assets in as good repair and condition
as at present, ordinary wear and tear excepted, and
to maintain supplies and inventories in quantities
consistent with past practice;
(iv) to use all commercially reasonable efforts to
maintain in full force and effect insurance,
performance bonds, bank guarantees and letters of
credit to the
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extent consistent with the ordinary course of
business consistent with past practice;
(v) to use all commercially reasonable efforts to
maintain in full force and effect all existing
Authorizations pursuant to which they operate and to
obtain timely any additional Authorizations or
renewals thereof to the extent Material to its
ongoing operations; and
(vi) to comply in all Material respects with all
applicable Legal Requirements;
except for any matters that, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on the
Businesses.
(b) The Parent and the Seller, jointly and severally, agree that,
from the date hereof to the Closing Date, except as otherwise
contemplated by this Agreement or as approved in writing by
the Acquiror, they will use all commercially reasonable
efforts to cause each Non-Controlled Entity to conduct its
business affairs in accordance with the provisions of clauses
(i) through (vi), inclusive, of subsection (a) of this
Section, except for any matters that, individually or in the
aggregate, could not reasonably be expected to have a Material
Adverse Effect on the Businesses. In this regard, the Acquiror
acknowledges that none of the Non-Controlled Entities is under
the direct or indirect control of the Parent.
Section 8.02. Negative Covenants Regarding the Operation of the
Businesses.
(a) The Parent and the Seller, jointly and severally, covenant and
agree that, except as set forth in Schedule 8.02(a) to the
Parent's Disclosure Letter, as otherwise contemplated by this
Agreement (including the Reorganization), or as approved in
writing by the Acquiror, from the date of this Agreement until
the Closing Date, they will not directly or indirectly through
any of their Affiliates offer, issue, sell, transfer or
otherwise dispose of, or grant any Lien with respect to, any
Equity Securities of any member of either Company Group or
authorize any of the foregoing.
(b) The Parent and the Seller, jointly and severally, covenant and
agree that, except as set forth in Schedule 8.02(b) to the
Parent's Disclosure Letter, as otherwise contemplated by this
Agreement (including the Reorganization), or as approved in
writing by the Acquiror, from the date of this Agreement until
the Closing Date, they will not permit any member of a Company
Group (other than any Non-Controlled Entity) to do any of the
following:
(i) (A) increase Significantly the compensation payable
to or to become payable to any director or officer
named in Schedule 8.02(b)(i) to the Parent's
Disclosure Letter, (B) except as otherwise provided
in clause (ii) of this subsection (b), grant any
severance or termination pay, (C) amend or take any
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other actions to increase Significantly the amount
of, or accelerate the payment or vesting of, any
benefit under any Benefit Plan or (D) contribute,
transfer or otherwise provide any Significant amount
of cash, securities or other property to any grantee,
trust, escrow or other arrangement that has the
effect of providing or setting aside assets for
benefits payable pursuant to any termination,
severance or other change in control agreement;
except (x) pursuant to the terms of any Principal
Contract of any member of a Company Group or any
Benefit Plan, contract, agreement or other legal
obligation existing at the Initial Balance Sheet Date
or (y) in the case of severance or termination
payments, pursuant to the severance policy of any
member of a Company Group existing at the Initial
Balance Sheet Date the terms of which are usual and
customary for similarly situated entities or any
Benefit Plan, contract, agreement or other legal
obligation existing at the Initial Balance Sheet
Date;
(ii) (A) enter into any employment or severance agreement
with any director or executive officer of any member
of either Company Group, either individually or as
part of a class of similarly situated persons, or (B)
establish, adopt or enter into any new Benefit Plan;
except employment and severance agreements and
Benefit Plans for the benefit of any newly employed
or promoted officers or employees, in which case the
terms of such agreements and Benefit Plans shall be
reasonably consistent with those existing at the
Initial Balance Sheet Date, and except Benefit Plans
relating to health and life insurance benefits
established or adopted in the ordinary course of
business consistent with past practice;
(iii) (A) redeem, purchase or acquire, or offer to purchase
or acquire, any of its outstanding Equity Securities
or those of any other member of a Company Group, (B)
effect any reorganization, liquidation, dissolution,
merger, consolidation, restructuring or
recapitalization, (C) split, combine or reclassify
any of its capital stock or other Equity Securities
or (D) declare, set aside or pay any dividend on or
make any other distribution in respect of its capital
stock or other Equity Securities, except (X)
dividends or distribution of cash by DEGI to Dresser
Industries in excess of the cash requirements set
forth in subsection (f) of Section 11.03 and (Y)
dividends by any direct or indirect wholly owned
Subsidiary of DEGI or any BV Company to DEGI or such
BV Company or to any other direct or indirect wholly
owned Subsidiary of DEGI or such BV Company;
(iv) offer, sell, issue or grant, or authorize the
offering, sale, issuance or grant of, any of its
capital stock or other Equity Securities;
(v) acquire on behalf of any member of either Company
Group, whether by purchasing an equity interest or
otherwise, any business or any corporation,
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partnership, association or other business
organization or division thereof other than any such
acquisition transaction that is not Material to the
Businesses;
(vi) acquire or construct for its account or that of any
other member of either Company Group any assets or
properties other than (A) any assets and properties
that are not Material to the Businesses, (B) assets
and properties acquired or constructed by making
capital expenditures approved prior to the date
hereof and (C) the acquisition of assets from
suppliers or vendors in the ordinary course of
business and consistent with past practice;
(vii) make any significant loan, advance or capital
contribution to, or any significant investment in,
any Person other than a direct or indirect wholly
owned Subsidiary of DEGI or any BV Company;
(viii) sell, lease, license, exchange or otherwise dispose
of (including any disposition through any permitted
lapse of any Intellectual Property rights), or grant
any Lien with respect to, any of its assets, except
for dispositions of assets and inventories in the
ordinary course of business consistent with past
practice and purchase money Liens incurred in
connection with the original acquisition of assets
secured by such assets;
(ix) adopt any amendments to its Organizational Documents;
(x) (A) make any change in any of its methods of
accounting in effect at the Initial Balance Sheet
Date, except as may be required to comply with U.S.
GAAP, or seek any regulations or rulings from any
Governmental Authority regarding the same, (B) make
or rescind any election relating to any Taxes (other
than any election that must be made periodically and
that is made consistent with past practice) or change
any of its methods of reporting income or deductions
for income tax purposes from such methods adopted and
currently in effect prior to the date of this
Agreement, except as may be required by Law, or (C)
settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation,
audit or controversy relating to Taxes, except, in
each case, as may be required by Law or for matters
that could not reasonably be expected to be adverse
and Significant;
(xi) incur any obligations for borrowed money or purchase
money indebtedness, whether or not evidenced by a
note, bond, debenture or similar instrument, except
Intercompany Indebtedness, purchase money
indebtedness as to which Liens may be granted
pursuant to clause (viii) of this subsection (b),
drawings under credit lines existing at the date of
this Agreement and borrowings evidenced by
obligations having a term of up to five years issued
in the ordinary course of business consistent with
past practice, or assume,
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guarantee, endorse or otherwise become liable or
responsible (whether directly, contingent, or
otherwise) for any Significant obligations of any
Person (other than a direct or indirect wholly owned
Subsidiary of DEGI or any BV Company);
(xii) (A) except in connection with the elimination or
satisfaction of a Contractual Transfer Restriction
required in order to consummate the Reorganization,
pay, repay, discharge, purchase, repurchase or
satisfy any other obligation for a Significant amount
of indebtedness for borrowed money owed by it or any
other member of either Company Group except in
accordance with its scheduled maturities; or (B)
modify the terms of any obligation for a Significant
amount of indebtedness for borrowed money owed by it
or any member of either Company Group, other than
modifications of short term debt that are not, in the
aggregate, Material;
(xiii) exclusive of those subject to clause (xii) of this
subsection and other than with respect to
Intercompany Indebtedness, pay, prepay, discharge, or
satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted,
contingent or otherwise) that are Material to the
Businesses, other than in the ordinary course of
business consistent with past practice (including the
payment of final and unappealable judgments);
(xiv) enter into any new Related Party Contract or any
Principal Contract with any third Person, other than
any distributorship or sales representation agreement
entered into in the ordinary course of business, that
provides that third Person with an exclusive
arrangement relating to a particular line of business
or geographic area;
(xv) initiate any proceeding before any federal, national,
state, regional or local regulatory agency in any
country (other than with respect to any Regulatory
Transfer Restriction required by any applicable Law,
Regulation or Order), which proceeding could
reasonably be expected to have a Material Adverse
Effect on the Businesses except for proceedings
related to Taxes undertaken in the ordinary course of
business with respect to submitting or perfecting a
claim for refund or defending or preserving rights
with respect to an assessed deficiency; or
(xvi) agree to do any of the foregoing.
(c) The Parent and the Seller, jointly and severally, hereby
covenant and agree that, prior to the Closing Date, except as
otherwise expressly contemplated by this Agreement or as
approved in writing by the Acquiror, they will use all
commercially reasonable efforts consistent with their
fiduciary obligations, if any, to prevent each Non-Controlled
Entity from taking any of the actions contemplated by clauses
(i)
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through (xvi) of subsection (b) of this Section. In this
regard, the Acquiror acknowledges that none of the
Non-Controlled Entities is under the direct or indirect
control of the Parent.
Section 8.03. Access to Information.
(a) Subject to any limitations on disclosures to which the Parent
and the Acquiror agreed in the Confidentiality Agreement, the
Parent shall, prior to the Closing Date, cause each member of
each Company Group (or, in the case of any Company Group
member that is a Non-Controlled Entity, use commercially
reasonable efforts to cause such Non-Controlled Entity) (i) to
afford to the Acquiror and its Representatives access, at
reasonable times upon reasonable prior notice, to the
officers, employees, agents, properties, offices and other
facilities of the Company Group member and to its Books and
Records and (ii) to furnish promptly to the Acquiror and its
Representatives such information concerning the properties,
contracts, records and personnel (including financial,
operating and other data and information) related to the
Businesses as may be reasonably requested, from time to time,
by or on behalf of the Acquiror; provided, that Acquiror's
Representatives (i) comply with the provisions of the
Confidentiality Agreement, (ii) comply with all applicable
safety and other rules of conduct of such offices and
facilities and (iii) do not unreasonably interfere with the
operation of such offices or facilities or the personnel
involved. In this regard, the Acquiror acknowledges that none
of the Non-Controlled Entities is under the direct or indirect
control of the Parent.
(b) Subject to any limitations on disclosures to which the Parent
and the Acquiror agreed in the Confidentiality Agreement, the
Parent shall, at any time following the issuance of a press
release or similar disclosure announcing the execution of this
Agreement and prior to the Closing Date, cause each member of
each Company Group to afford to the Acquiror and its
Representatives access, at reasonable times and upon
reasonable prior notice, to the customers and suppliers of
such Company Group member.
(c) All information provided to the Acquiror and the Acquiror's
Representatives pursuant to the Parent's Disclosure Letter and
otherwise pursuant to subsection (a) of this Section shall be
deemed to be "Evaluation Material" as that term is defined in
the Confidentiality Agreement but subject to the exclusions
and exceptions described therein.
Section 8.04. Insurance Benefits. If, with respect to any of the
Assumed Obligations or, to the extent that the Acquiror is not then entitled to
indemnification therefor pursuant to Article XII, any of the Excluded
Liabilities, the Parent has prior to the Closing Date carried one or more
policies of insurance for the benefit of a member of a Company Group that may
provide coverage for such Assumed Obligation, then after the Closing Date the
Parent shall assist the Acquiror and its relevant Subsidiary in making a claim
for the benefits of such insurance; provided, however, that the Parent
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shall have no liability with respect to the success or failure of such claim.
Neither the Acquiror nor, following the Closing Date, any Subsidiary of the
Acquiror shall have any rights as provided in this Section 8.04 with regard to
any insurance policies of the Parent that are in effect self insurance, such as
retrospectively rated, deductible or captive reinsured policies.
Section 8.05. Compliance with Competition Laws Applicable to Designated
Regulatory Assets.
(a) Subject to the Acquiror's compliance with subsection (a) of
Section 10.01 and the satisfaction of the conditions contained
in subsection (b) of this Section, at any time after the
Closing Date and prior to the second anniversary of the
Closing Date, the Acquiror may elect to require, by giving
notice to the Parent of such election, the Parent or, if the
Parent so desires, an Affiliate of the Parent to repurchase
any Designated Regulatory Assets for cash consideration equal
to the value allocated to such Designated Regulatory Assets in
the column entitled "Allocated Dollar Amount" in Schedule 2.13
to the Parent's Disclosure Letter within 90 days after the
receipt of such notice by the Parent, and the Parent or, at
the election of the Parent, an Affiliate of the Parent shall
purchase such Designated Regulatory Assets for such cash
consideration within such period. To the extent that an amount
set forth in Schedule 2.13 to the Parent's Disclosure Letter
becomes the purchase price for any such entity as a Designated
Regulatory Asset, such amount shall be reduced by the amount
of any payment by the Parent to the Acquiror under Article XII
directly related to such entity.
(b) It shall be a condition to the Acquiror's right to exercise
the option with respect to any Designated Regulatory Assets as
provided in subsection (a) of this Section that:
(i) such assets became Designated Regulatory Assets no
more than 90 days prior to the exercise of such
option;
(ii) such Designated Regulatory Assets shall be
transferred to the Parent or an Affiliate of the
Parent, as applicable, free and clear of all Liens
(other than Liens in existence immediately prior to
the Closing) and shall not be subject to an aggregate
amount of liabilities materially in excess of the
aggregate liabilities to which such Designated
Regulatory Assets were subject immediately prior to
the Closing;
(iii) the Acquiror shall agree, for a period of five years
from the date of the transfer of such Designated
Regulatory Assets to the Parent or an Affiliate of
the Parent, to provide or cause to be provided to or
to purchase or cause to be purchased from, as the
case may be, the Parent or an Affiliate of the
Parent, as applicable, such quantity and quality of
products, components, spare parts and services as the
other operations of the Businesses have historically
provided to, or purchased from, as the case may be,
such Designated
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Regulatory Assets at the applicable Adjusted Price
for such product, component, spare part or service
and
(iv) at the dates of exercise of the option and at the
date of transfer of such Designated Regulatory
Assets, the Acquiror shall represent and warrant to
the Parent or an Affiliate of the Parent, as
applicable, that the matters set forth in clauses (i)
and (ii) of this subsection (b) are true and correct
and that since the Closing Date, the Acquiror or any
other Person owning, operating or managing such
Designated Regulatory Assets has, in all Material
respects:
(A) operated such Designated Regulatory Assets
in the usual and ordinary course consistent
with past practices;
(B) used all commercially reasonable efforts to
preserve substantially intact the business
organization and goodwill, if any,
associated with such Designated Regulatory
Assets, to maintain the rights, privileges
and immunities, if any, of such Designated
Regulatory Assets, to retain the services of
any key employees of such Designated
Regulatory Assets, to perform in all
material respects the material contracts and
agreements relating to such Designated
Regulatory Assets and to maintain the
relationships with customers, regulators and
suppliers of such Designated Regulatory
Assets;
(C) used all commercially reasonable efforts
consistent with past practice to maintain
and to keep such Designated Regulatory
Assets in as good repair and condition as at
the Closing Date, ordinary wear and tear
excepted, and to maintain supplies and
inventories of such Designated Regulatory
Assets in quantities consistent with past
practice;
(D) used all commercially reasonable efforts to
maintain in full force and effect insurance,
performance bonds, bank guarantees and
letters of credit on behalf of or with
respect to such Designated Regulatory Assets
to the extent consistent with the ordinary
course of business consistent with past
practice;
(E) used all commercially reasonable efforts to
maintain in full force and effect all
existing Authorizations pursuant to which
such Designated Regulatory Assets operate
and to obtain timely any additional
Authorizations or renewals thereof to the
extent material to the ongoing operations of
such Designated Regulatory Assets; and
(F) complied with all Legal Requirements
applicable to such Designated Regulatory
Assets.
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(c) The Acquiror shall have 60 days from and after the repurchase
by a member of the Parent Group of Designated Regulatory
Assets under subsection (a) of this Section 8.05 to present
the Parent with a reasonably viable plan pursuant to which (i)
one or more members of a Company Group would again purchase
all or a portion of such Designated Regulatory Assets or (ii)
such member or members of a Company Group would enter into a
contractual relationship with one or more Subsidiaries of the
Parent that would provide to the Parent and the Acquiror
approximately the same economic benefits and obligations as
such a purchase of all or a portion of the Designated
Regulatory Assets which plan (x) is reasonably likely to be
acceptable to all Governmental Authorities having jurisdiction
over such Designated Regulatory Assets and (y) may be
accomplished in no more than 24 months from the date of
repurchase by the member of the Parent Group. The Parent and
the Acquiror agree to negotiate in good faith and pursue such
plan on commercially reasonable terms so long as it is
practicable to do so but in any event no longer than 90 days.
Section 8.06. Covenant Not to Compete. For a period commencing on the
Closing Date and ending on the third anniversary of the Closing Date, the
Parent, the Seller and their respective Subsidiaries (whether now existing or
hereafter acquired or created and for so long as the Seller and such
Subsidiaries remain as Subsidiaries of the Parent) shall not directly or
indirectly engage in any geographical area in any business of the same type as
that conducted by any of the Businesses as of the Closing Date in that
geographical area (a "Competing Business"); provided, however, that the
foregoing shall not prohibit (a) the ownership by the Parent, the Seller or any
of their respective Subsidiaries (whether now existing or hereafter acquired or
created) of less than 5% of the outstanding stock of any publicly-traded
corporation engaged in a Competing Business, (b) activities by the Parent, the
Seller or their respective Affiliates that were existing activities of the
Parent, the Seller or their respective Affiliates as of the Closing Date other
than activities of the Businesses, (c) providing services similar to the
services provided by the Businesses to only the Parent, the Seller and their
Affiliates, provided, that the Parent and the Seller hereby represent that the
Parent, the Seller or any Affiliate thereof does not, as of the date hereof or
as of the Closing Date, have any current intention of providing any such
services, (d) the acquisition of the Parent, the Seller or any of their
Affiliates by a third party whose operations involve a Competing Business, (e)
the acquisition by the Parent, the Seller or any of their Affiliates of a third
party which engages in a Competing Business, provided that the primary purpose
of any such acquisition referred to in this clause (e) is not the acquisition of
such Competing Businesses, and provided further that such Competing Business
referred to in this clause (e) either (i), together with the revenues for any
prior acquisition exempted from the provisions of this Section 8.06 by this
clause (e)(i), accounts for less than U.S. $50,000,000 in revenues for the last
fiscal year of such third party for which financial statements are available or
(ii) is divested by the Acquiror within 270 days from the date it is acquired or
(f) the Parent or any of its Affiliates acquiring any Designated Regulatory
Assets pursuant to subsection (a) of Section 8.05; provided, however, that if
significant progress has been made and is continuing with respect to such
divestiture by the end of such period, the period shall be extended at the
request of the Parent for an additional ninety (90) days. If the final judgment
of a Court of competent jurisdiction declares that any term or provision of this
Section 8.06 is invalid or unenforceable, the parties agree that the Court
making the determination of invalidity or
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unenforceability shall have the power to reduce the scope, duration, or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid and unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed. The Parent and the Seller acknowledge that the
provisions of this Section 8.06 are reasonable in time and scope and necessary
to protect the legitimate interests of the Acquiror and each Buyer and that any
violation of this Section 8.06 will result in irreparable injury to the
Acquiror, each Buyer and to the Businesses, the exact amount of which will be
difficult to ascertain, and that the remedies at law for any such violation
would not be reasonable or adequate compensation to the Acquiror, the Buyers and
the Businesses. Accordingly, the Parent and the Seller agree that, if any of
them or any of their Subsidiaries (whether now existing or hereafter acquired or
created) violates this Section 8.06, the Acquiror, any of the Buyers and the
members of each Company Group (following consummation of the transactions
contemplated hereby) shall be entitled, in addition to any other remedy that may
be available at law or in equity, to specific performance and injunctive relief,
without posting bond or other security and without the necessity of proving
actual damages.
Section 8.07. Nonsolicitation. The Parent hereby covenants and agrees
that, prior to the Closing Date, the Parent shall not and shall not permit the
Seller or any member of either Company Group, (whether directly or indirectly
through its officers, directors, advisors, agents or other intermediaries) to
(i) solicit, initiate or take any action to facilitate the submission of
inquiries, proposals or offers from any Person or group relating to (A) any
acquisition or purchase of any portion of any Business or any Securities, (B)
any merger, consolidation, recapitalization, sale of all or substantially all of
the assets, liquidation, dissolution or similar transaction involving any member
of either Company Group other than in connection with the Reorganization or
transactions contemplated by this Agreement or (C) any other transaction that,
if agreed to by the Parent or any of its Subsidiaries, would contractually
prohibit the Parent or the Seller from consummating all or any part of the
transactions contemplated by this Agreement (each such transaction described in
clauses (A), (B) and (C) being referred to herein as an "Acquisition Proposal"),
or agree to or endorse any Acquisition Proposal, (ii) enter into or participate
in any discussions or negotiations regarding any of the foregoing, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person (other than any Buyer) to do or seek
any of the foregoing. The Parent shall, and shall cause the Seller and each
member of both Company Groups immediately (i) to cease and cause its officers,
directors, advisors, agents and other intermediaries to cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal and (ii) to provide written
notification to the Acquiror of any submissions, proposals, offers or inquiries
relating to an Acquisition Proposal made prior to the Closing Date but shall not
be required to disclose the contents of such proposal or the identity of the
bidder. The Parent and the Seller hereby represent that they are not now engaged
in discussions or negotiations with any party other than Acquiror with respect
to any Acquisition Proposal. After the Closing Date, the Parent shall provide
the Acquiror with copies of all written submissions, proposals, offers and
inquiries relating to Acquisition Proposals except to the extent that the
provisions of such information would violate any contractual obligation of the
Parent or its Retained Subsidiaries.
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Section 8.08 Accountants' Opinion and Consents. The Parent shall use
all commercially reasonable efforts to cause Xxxxxx Xxxxxxxx LLP to provide the
Acquiror, at the Acquiror's expense, with all opinions and consents (including
audit reports) with respect to the consolidated financial statements of the
Businesses necessary for inclusion in any offering memoranda prepared in
connection with any offering of securities pursuant to Rule 144A promulgated
under the Securities Act, or for the completion of filings with the SEC under
the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"), until such time as such financial statements,
opinions and consents are no longer required to be included in such filings by
the Securities Act, the Securities Exchange Act or the rules and regulations
promulgated thereunder.
Section 8.09. Financing.
(a) Subject to subsection (b) of this Section 8.09, prior to the
Closing Date, the Parent agrees to use all commercially
reasonable efforts to provide, and to cause the Seller and
each member of each Company Group, their advisers and the
personnel of each member of each Company Group to provide, all
necessary cooperation in connection with the arrangement of
any financing that is to be consummated contemporaneously with
the First Closing or within twelve months after the Closing
Date in respect of the transactions contemplated by this
Agreement, including participation in meetings, due diligence
sessions, road shows, the preparation of offering memoranda,
private placement memoranda, prospectuses and similar
documents ("Offering Documents"), completion of a 2000
year-end audit, the execution and delivery of any commitment
letters, underwriting or placement agreements, pledge and
security documents, other definitive financing documents, or
other requested certificates or documents, including a
certificate of the chief financial officer of each member of
each Company Group with respect to solvency matters, comfort
letters of accountants and legal opinions as may be reasonably
requested by the Acquiror, provided, however, that the
advisors and personnel of the Parent shall not be required to
participate in meetings, due diligence sessions, or road shows
after the six month anniversary of the Closing Date.
(b) The Acquiror agrees that it will provide the Parent with a
reasonable opportunity to review each Offering Document and
that it will not, and will cause its Affiliates and its and
their agents, advisors, underwriters and placement agents to
not, distribute such Offering Document to any investor or
potential investor in any of the securities offered or to be
offered pursuant to such Offering Document without obtaining
the prior written approval of the Parent (which approval shall
not be unreasonably withheld) of all information contained in
such Offering Document that relates in any way to the
Businesses.
(c) The Parent shall cooperate and shall cause the Seller and each
member of each Company Group to cooperate with any reasonable
requests of the Acquiror or the SEC related to the recording
of the transaction contemplated hereby as a Recapitalization
for financial reporting purposes, including assisting the
Acquiror
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and its Affiliates with any presentation to the SEC with
regard to such recording. Unless otherwise required by Law or
by any pronouncement of the SEC or by any authoritative
accounting association after the Closing Date, the Parent
agrees that it will not report the transaction contemplated
hereby for financial accounting or other public disclosure
purposes in a manner inconsistent with such recording.
(d) The Acquiror agrees to reimburse the Parent promptly for all
reasonable costs and expenses incurred by the Parent or any of
its Affiliates in connection with the Parent's obligations
under this Section 8.09.
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Section 8.10. Financial Statements.
(a) From the date hereof to the Closing Date, the Parent shall
provide the Acquiror with (i) monthly management reports on
the Businesses, (ii) an unaudited consolidated balance sheet
of the Businesses and the related consolidated statements of
operations of the Businesses for each calendar month within 20
days after the end of such calendar month and (iii) any other
financial reports prepared routinely by management of the
Company Groups.
(b) The Parent shall use all commercially reasonable efforts to
provide to the Acquiror, on or before February 28, 2001,
consolidated statements of assets contemplated for sale and
liabilities expected to be transferred of the Dresser
Equipment Group as of December 31, 2000 and December 31, 1999
and the related consolidated statements of revenues and
expenses and cash flows for the years ended December 31, 2000,
1999 and 1998, each prepared in accordance with U.S. GAAP
(including the related notes thereto) and audited by Xxxxxx
Xxxxxxxx, LLP.
Section 8.11. Assignments. To the extent that any assets listed in the
Parent's Disclosure Letter or that are otherwise Material to the Businesses are
not held by a member of any Company Group, the Parent shall, prior to the
Closing, effect the assignment of such assets to a member of a Company Group
designated by the Acquiror. To the extent that time does not permit proper
recordation of such assignments, as for example in the case of certain
assignments of Intellectual Property, the Parent shall cause the assignment of
beneficial title to be effected prior to the Closings and, subsequent to the
Closings, will provide such assistance and cooperation as necessary to effect
recordable assignments of such assets.
Section 8.12. Release of Liens. To the extent that any Liens exist with
respect to any assets and properties of any member of the Company Groups
securing debt of any member of the Parent Group, the Parent agrees to use all
commercially reasonable efforts to cause such Liens, to the extent they attach
to such assets and/or properties, to be released as soon as practicable.
Section 8.13. Environmental Schedules. The Parent agrees that the
Parent will prepare and deliver to the Acquiror at the First Closing a revised
Schedule 5.11 to the Parent's Disclosure Letter to set forth all matters
described in clause (a), (c) and (e) of the definition of Indemnifiable
Environmental Matters as of the Closing Date, which Schedule 5.11 shall (a)
constitute a representation and warranty, which shall survive until the fifth
anniversary of the Closing Date, as to such matters as of the Closing Date
subject to the provisions of clause (i) of subsection (a) of Section 12.02 and
(ii) govern the matters subject to indemnification pursuant to the provisions of
Article XII as that Article applies to such Indemnifiable Environmental Matters.
Section 8.14. Use of Dresser Name. Prior the Closing, the Parent agrees
that it will not directly or indirectly organize any new Subsidiary, or rename
any existing Subsidiary, using the name Dresser or any variation thereof.
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ARTICLE IX
COVENANTS OF THE ACQUIROR
Section 9.01. Confidentiality Agreement. The parties hereto hereby
incorporate by reference the provisions of paragraphs 1 to 3, inclusive, and 8
to 11, inclusive of the Confidentiality Agreement (including any addenda
thereto).
Section 9.02. Corporate Name. Neither the Acquiror nor any Buyer shall
acquire, and no member of either Company Group shall acquire or retain, any
rights to the name "Halliburton" (or any variation thereof) or any trademarks,
trade names or symbols related thereto. The Acquiror shall, as soon as
reasonably practicable after the Closing Date (and in any event, within 60 days
thereafter), cause each member of each Company Group to amend its Organizational
Documents to the extent necessary to remove the "Halliburton" name (and any
variations thereof) from the name of such company and to remove all trademarks,
trade names, logos and symbols related to such name from the properties and
assets (including all signs) of the members of the Company Groups.
Section 9.03. Surety Arrangements. The Acquiror acknowledges the list
of Surety Arrangements set forth on Schedule 5.09(c) to the Parent's Disclosure
Letter. The Acquiror agrees to use all commercially reasonable efforts prior to
the Closing Date to substitute the credit of the Acquiror or a Subsidiary of the
Acquiror for that of the Parent or the Retained Subsidiary of the Parent in each
such Surety Arrangement, such substitution to take effect at the First Closing.
The Acquiror agrees that it will, from and after the Closing Date, indemnify and
hold the Parent and each Retained Subsidiary harmless from and against any and
all losses, claims and damages arising from any Surety Arrangement extant at the
First Closing and, to the extent that the Acquiror is not able to effect such a
substitution prior to the Closing Date, the Acquiror also agrees (a) to continue
to use, and to cause each Buyer to use, its commercially reasonable efforts
thereafter to effect such a substitution with respect to each Surety Arrangement
and (b) to provide to the Parent at the First Closing a letter of credit issued
by a responsible commercial bank reasonably acceptable to the Parent against
which the Parent and the Retained Subsidiaries may draw to the extent of any
loss or damage they may incur or suffer as a result of being required to perform
any obligations under any Surety Arrangements from and after the Closing Date.
Section 9.04. Dresser Valve Division Contracts. From and after the
Closing Date, the Acquiror shall cause its Subsidiaries engaged in the Dresser
Valve Division Business to use their commercially reasonable efforts to amend
the executory alliance contracts, master purchase agreements and purchase orders
of the Dresser Valve Division Business that do not contain any provision
expressly prohibiting awards of consequential damages as a partial remedy for
breach of such contract to include such a provision prior to the first renewal
or extension thereof.
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ARTICLE X
MUTUAL COVENANTS
Section 10.01. Cooperation. The covenants in this Section 10.01 shall
apply to the parties hereto from and after the date of this Agreement:
(a) Each of the Parent and the Acquiror shall use, and shall cause
each of its respective Affiliates to use, all commercially
reasonable efforts (i) to take, or to cause to be taken, all
actions, and to do, or to cause to be done, all things that,
in either case, are necessary, proper or advisable under
applicable Legal Requirements (other than foreign competition
Laws except those of the Category 1, 2A and 2B Jurisdictions)
or otherwise to consummate and make effective the transactions
contemplated by this Agreement, (ii) subject to the provisions
of clause (iii) of this subsection (a), to obtain from any
Governmental Authorities and Courts any Authorizations or
Orders required to be obtained by the Parent or the Acquiror
or any of their Affiliates in connection with the
authorization, execution, delivery and performance of this
Agreement and the Ancillary Agreements and the consummation of
the transactions contemplated hereby and (iii) to make all
necessary filings as expeditiously as reasonably practicable,
and thereafter to make promptly any other required
submissions, with respect to this Agreement, the Ancillary
Agreements and the transactions contemplated hereby and
thereby required under the HSR Act, any foreign competition
Laws of a Category 1 Jurisdiction, a Category 2A Jurisdiction
or a Category 2B Jurisdiction that are applicable to the
transactions contemplated by this Agreement and any other
applicable Legal Requirements (other than foreign competition
Laws). With respect to the Laws of the Covered Jurisdictions,
the Parent and the Acquiror shall furnish or cause to be
furnished all information required for any application or
other filing to be made pursuant to any such Laws or any
applicable Regulations in connection with the transactions
contemplated by this Agreement.
(b) Each of the Parent and the Acquiror shall timely give or cause
to be given any notices to third Persons, and use, and cause
its respective Affiliates to use, commercially reasonable
efforts to obtain any Third Person Consents (i) necessary,
proper or advisable for Parent or the Acquiror, as the case
may be, to consummate the transactions contemplated by this
Agreement or to satisfy any of the Closing Conditions, (ii) in
the case of the Parent and its Affiliates, otherwise required
under any Principal Contracts in connection with the
consummation of the transactions contemplated hereby or (iii)
in the case of the Parent and its Affiliates, required in
order to prevent a Material Adverse Effect on the Businesses
from occurring prior to or after the Closing Date; provided,
however, that, with respect to Third Person Consents set forth
on Schedule 5.02(c), the Parent shall use, and cause its
Affiliates to use, efforts that are deemed customary and usual
in the jurisdiction in which any such Third Person Consent is
required to obtain any such Third Person Consent;
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provided, further, that the Parent shall not be required to
expend an amount of money that would be unreasonable in light
of local custom and practice in order to obtain any such Third
Person Consent. The Parent and Acquiror shall cooperate with
each other in connection with the giving of all such notices
and the preparation of all consent or waiver requests or
agreement amendments. The Parent and the Acquiror shall
cooperate with each other in providing copies of all such
documents to the other party and its advisors, and, if
requested, shall accept all reasonable additions, deletions or
changes suggested in connection therewith. The Parent and
Acquiror shall furnish or cause to be furnished all
information requested by the other party in connection with
this subsection (b).
(c) Each of the Parent and the Acquiror shall give, and shall
cause its Affiliates to give, prompt notice to the other of
(i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in
connection with the transactions contemplated hereby, (ii) any
notice or other communication from any Governmental Authority
in connection with the transactions contemplated hereby, (iii)
any actions, suits, claims, investigations or proceedings
commenced or threatened in writing against, relating to or
involving or otherwise affecting the Parent, the Acquiror or
any member of a Company Group that relate to the consummation
of the transactions contemplated hereby and (iv) the
occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be reasonably likely (A) to cause
any Closing Condition relating to the obligations of the other
party not to be satisfied, (B) to cause a breach of the
covenants of such party under this Agreement or (C) to delay
or impede the ability of either the Parent or the Acquiror to
consummate the transactions contemplated by this Agreement or
to fulfill their respective obligations set forth herein. No
delivery of any notice pursuant to clause (iv) of this
subsection (c) shall cure any breach of any representation or
warranty of the party giving such notice contained in this
Agreement or otherwise limit or affect the remedies available
hereunder to the party receiving such notice.
(d) Each of the Parent and the Acquiror agree to cooperate and to
use, and to cause their Affiliates to cooperate and to use,
all commercially reasonable efforts, vigorously to contest and
to resist any action, including legislative, administrative or
judicial action, and to have vacated, lifted, reversed or
overturned any Order (whether temporary, preliminary or
permanent) of any Court or Governmental Authority that is in
effect and that restricts, prevents or prohibits the
consummation of the transactions contemplated by this
Agreement, including the vigorous pursuit of all available
avenues of administrative and judicial appeal and all
available legislative action. Each of the Parent and the
Acquiror also agree to use all commercially reasonable efforts
to take, or to cause to be taken, any and all actions,
including the disposition (by the Acquiror) or retention (by
the Parent) of assets or the withdrawal from doing business in
particular jurisdictions, required by any Court or
Governmental Authority as a condition to the granting of any
Authorization or Order
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necessary for the consummation of the transactions
contemplated hereby or as may be required to avoid, lift,
vacate or reverse any legislative, administrative or judicial
action to the extent that such action would otherwise cause
any condition to the First Closing not to be satisfied or
would restrict, prevent or prohibit the consummation of the
transactions contemplated hereby; provided, however, that in
no event shall the Parent be required to take, or cause to be
taken, any action that could reasonably be expected to have a
Material Adverse Effect on the Parent or on the Businesses or
shall the Acquiror be required to take, or cause to be taken,
any action that could reasonably be expected to have a
Material Adverse Effect on the Acquiror or on the Businesses.
(e) The Parent shall use its commercially reasonable efforts
consistent with its fiduciary obligations to cause any
Non-Controlled Entity in which it has a direct or indirect
ownership interest to take action consistent with its other
obligations under this Section 10.01 including (i), where
appropriate, voting, directly or indirectly, the Equity
Securities owned by it directly or indirectly in such
Non-Controlled Entity in a manner consistent with such
obligations and (ii) instructing each director or similar
official of such Non-Controlled Entity appointed, directly or
indirectly, by it to act in a manner consistent with such
obligations so long as any such action does not violate such
director's or official's fiduciary duties. In this regard, the
Acquiror acknowledges that none of the Non-Controlled Entities
in which the Parent has a direct or indirect ownership
interest is under the direct or indirect control of the
Parent.
(f) Nothing in this Section 10.01 shall be deemed to require
divestiture of any securities or other assets owned prior to
the Closing Date by the Acquiror, any direct or indirect
holder of Equity Securities in the Acquiror or any Affiliate
of the foregoing Persons.
Section 10.02. Ancillary Agreements. The Parent and the Acquiror agree
to execute and deliver at the First Closing:
(i) the Merger Agreement;
(ii) the Assignment of Name;
(iii) the Highway 6 Lease Agreement;
(iv) the Employee Benefits Agreement;
(v) the Transition Services Agreement; and
(vi) the Stockholders' Agreement.
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Section 10.03. Public Announcements. Promptly following the execution
and delivery of this Agreement, the Parent and the Acquiror shall issue
concurrent press releases with respect to the subject matter of this Agreement.
Pending the Closing Date, the Acquiror and the Parent shall consult with, and
obtain the prior approval of, the other, which shall not be unreasonably
withheld, before issuing any other press release or otherwise making any public
statements with respect to the transactions contemplated hereby. Neither the
Parent nor the Acquiror shall permit any of its Affiliates to make any press
release or public statement with respect to the transactions contemplated
hereby. Notwithstanding the foregoing, this Section shall not preclude any party
from issuing such press releases, making such other public statements or making
such filings with or applications to Governmental Authorities, including a
filing of a Current Report on Form 8-K by the Parent with the SEC with respect
to the transactions contemplated hereby, as such party in good faith believes to
be required under applicable Legal Requirements.
Section 10.04. Transfer Taxes. The Parent and the Acquiror shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer, sales, use, and stamp taxes, any transfer, recording, registration and
other fees and any similar taxes that become payable as a direct result of the
transactions contemplated hereby ("Transfer Taxes"). The Transfer Taxes that
become payable as a result of the transfers included in the Reorganization and
as a result of the sale of the Securities shall be paid 50% by the Acquiror and
50% by the Parent.
Section 10.05. Expenses. Except as otherwise expressly provided herein,
all costs and expenses incurred by the Parent in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Parent, and all
costs and expenses incurred by the Acquiror in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Acquiror.
Notwithstanding the foregoing, the Acquiror shall be responsible for and shall
pay or reimburse the Parent for (i) all expenses incurred in connection with
steps I-7, X-0, X-0, X-00, X-00, X-00, XX-0, II-10, XXX-0, XX-0, XX-0, X-0,
X-0X, X-0, X-0, V-11, V-16, V-19, V-27 and V29 in the Reorganization described
in Annex B and any actions taken at the direction of the Acquiror or any
individual that the Acquiror has identified in written notice to the Parent and
(ii) any Taxes that would not have been incurred but for such actions and steps.
For the avoidance of doubt all costs incurred in the formation of DI France
S.A.S. are the responsibility of the Acquiror and all costs incurred in the
formation of DI Singapore Pte Ltd. are the responsibility of Parent.
Notwithstanding the foregoing, the Parent shall be responsible for, and shall
pay or reimburse the Acquiror for, the expenses incurred as a result of
recording assignments of Intellectual Property and Real Property pursuant to
Section 8.11, whether prior to or after the Closings.
Section 10.06. Tax Matters.
(a) Within 240 days after the Closing Date, the Acquiror in its
sole discretion may cause to be made a timely and effective
election under section 338(g) of the Code (a "Section 338
Election") with respect to a qualified stock purchase (within
the meaning of Section 338 of the Code) of any member of a
Company Group that is a foreign corporation.
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(b) The Acquiror shall indemnify and hold harmless the Parent and
each member of the affiliated group of which the Parent is the
common parent (within the meaning of section 1504 of the Code)
from and against any United States federal or state income or
franchise Tax Consequence arising solely by reason of any
Section 338 Election made. A "Tax Consequence" shall include
(by way of example and not limitation) a reduction in or
change in characterization of available foreign taxes under
sections 901 or 902 of the Code.
(c) The Parent and the Acquiror shall make a joint election under
section 338(h)(10) of the Code and any similar election under
the applicable income tax law of any state or political
subdivision of the United States (collectively, the "Section
338(h)(10) Elections") with respect to the Acquiror's purchase
of the Securities of DEGI and any deemed purchase of the
Securities of any Subsidiary of DEGI that is a domestic
corporation within the meaning of Section 7701 of the Code.
The Acquiror shall prepare and submit to the Parent a proposed
allocation of the aggregate deemed sales price (as defined in
Treasury Regulation Section 1.338-4T) for each member of the
DEGI Group among the assets of each such member as soon as
practicable but not later than 240 days after the Closing
Date. The Parent shall approve and agree to the proposed
allocation unless the Parent reasonably determines that the
proposed allocation is improper. Neither the Acquiror nor the
Parent shall take any action inconsistent with, or fail to
take any action necessary for, the validity of the Section
338(h)(10) Elections, and, if an allocation schedule is agreed
to by the Acquiror and the Parent, the Acquiror and the Parent
shall adopt and utilize the asset values as determined on the
allocation schedule for the purpose of all Tax Returns filed
by them unless otherwise required by applicable law. Not later
than 240 days after the Closing Date, the Acquiror shall
prepare and deliver to the Parent an Internal Revenue Service
Form 8023 and any similar form under applicable state income
tax law (the "Forms") with respect to the Section 338(h)(10)
Elections, together with any completed schedules required to
be attached thereto, which Forms shall have been duly executed
by an authorized person for the Acquiror. The Parent shall
cause the Forms to be duly executed by an authorized person
for the Parent and shall provide an executed copy of the Forms
to the Acquiror, whereupon each shall duly and timely file the
Forms as prescribed by Treasury Regulation 1.338(h)(10)-1T or
the corresponding provisions of the applicable income tax law
of any state or political subdivision of the United States.
Each such executed Form provided to the Parent shall be
accompanied by a certificate of the secretary of the Acquiror
that documents the authority of the signatory to make the
Section 338(h)(10) Election.
(d) The Parent shall cause to be included in the consolidated U.S.
federal income Tax Returns (and the U.S. state income Tax
Returns of any U.S. state that permits consolidated, combined
or unitary income Tax Returns, if any) of the affiliated group
of corporations of which the Parent is the common parent
corporation for all periods ending on or before the Closing
Date, all Tax Items of each member of each
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Company Group that are required to be included therein, shall
cause such Tax Returns to be timely filed with the appropriate
taxing authorities, and shall be responsible for the timely
payment (and entitled to any refund) of all Taxes due with
respect to the periods covered by such Tax Returns. To the
extent permitted by law or administrative practice, (A) the
taxable year of DEGI and each of its Subsidiaries (after
reflecting the Reorganization) that is a domestic corporation
that includes the Closing Date shall be treated as closing on
(and including) the Closing Date and (B) all transactions
occurring on the Closing Date but after the Closings shall
have occurred shall be reported on the Acquiror's consolidated
United States federal income tax return to the extent
permitted by Treasury Regulation Section
1.1502-76(b)(1)(ii)(B) and shall be similarly reported on
other Tax Returns of the Acquiror or its Affiliates.
(e) With respect to all Tax Returns required to be filed after the
Closing Date by or with respect to any member of a Company
Group other than those Tax Returns described in subsection (d)
of this Section, the Acquiror shall cause each such Tax Return
to be prepared, shall cause to be included in each such Tax
Return all Tax Items required to be included therein, shall
cause each such Tax Return to be timely filed with the
appropriate taxing authorities, and shall be responsible for
the timely payment (and entitled to any refund or credit) of
all Taxes due with respect to the period covered by each such
Tax Return. Any Tax Return to be prepared pursuant to the
provisions of this subsection (e) with respect to a taxable
year that includes any period on or before the Closing Date
shall be prepared in a manner consistent with practices
followed in prior years with respect to similar Tax Returns,
except for changes required by changes in law or fact.
(f) With respect to all Tax Returns filed by or with respect to
any member of a Company Group on or prior to the Closing Date,
the Parent shall be responsible for the payment of all Taxes
and shall be entitled to all refunds or credits of any Taxes
attributable to the periods covered by such Tax Returns and
shall have the right, at its sole cost and expense, to control
the defense, prosecution, settlement or compromise of any
proceeding involving any such Tax Return or the period covered
thereby, and the Acquiror shall take such action in connection
with any such proceeding as the Parent shall request from time
to time, including the selection of counsel and experts and
the execution of powers of attorney; provided, however, that
if Acquiror or any member of a Company Group would bear any
liability for Taxes at issue in such proceeding for which
Acquiror would not be indemnified pursuant to Article XII, or
if Acquiror or any member of a Company Group would be bound by
the results of such proceeding for Tax periods (or portions
thereof) beginning after the Closing Date, then (i) the
Acquiror may also participate in such proceeding at its own
expense and (ii) neither party may settle any such proceeding
without the written consent of the other party (which consent
shall not be unreasonably withheld). The Parent shall give
written notice to the Acquiror of, and the Acquiror shall, and
shall cause each member of a Company Group to, give written
notice to
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the Parent, of its receipt of any notice of any audit,
examination, claim or assessment for any Tax which could
result in any such proceeding, within 20 Business Days after
the receipt of such notice. Failure of the Acquiror or any BV
Company or Subsidiary to give the Parent written notice of any
such audit, examination, or assessment within such 20 Business
Day period shall cause the provisions of Article XII to be
inapplicable to any Losses realized with respect to such Tax
but only to the extent Parent was actually prejudiced by such
failure.
(g) The Acquiror and the Parent shall cooperate fully, as and to
the extent reasonably requested by the other party, in
connection with the filing of Tax Returns pursuant to this
Section 10.06 and any audit, litigation or other proceeding
with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to
any such proceeding and making employees (including employees
of any member of a Company Group) available on a mutually
convenient basis to provide additional information and
explanation of any material provided hereunder. The Acquiror
and the Parent agree (i) to retain all Books and Records with
respect to Tax matters pertinent to the any member of a
Company Group relating to any taxable period beginning before
the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by the Acquiror or
the Parent, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements
entered into with any taxing authority, and (ii) to give the
other party reasonable written notice prior to transferring,
destroying or discarding any such Books and Records and, if
the other party so requests, the Acquiror or the Parent, as
the case may be, shall allow the other party to take
possession of such Books and Records. The Acquiror and the
Parent further agree, upon request, to use their best efforts
to obtain any certificate or other document from any
Governmental Authority or any other Person as may be necessary
to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the
transactions contemplated hereby). The Acquiror and the Parent
further agree, upon request, to provide the other party with
all information that either party may be required to report
pursuant to Section 6043 of the Code and the Treasury
Regulations promulgated thereunder.
Section 10.07. Offers to Employees.
(a) The Parent has listed in Schedule 10.07(a) to the Parent's
Disclosure Letter the names and positions of certain of those
employees of the Parent or one of the Retained Subsidiaries
that have been seconded to members of the Company Groups. The
Acquiror agrees that, pending the Closing Date and for a
period of six (6) months thereafter, neither the Acquiror nor
any of its Subsidiaries, including the Buyers and (after the
Closing Date) their Subsidiaries, will make any offer of
employment or solicit any request for employment to or from
any of the employees so listed, except (i) for any such
employees included in an agreed list contained in a letter of
even date
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herewith from the Parent to the Acquiror or (ii) with the
prior written consent of the Parent. For purposes of the
preceding sentence, the term "employment" shall include an
employee/employer relationship and/or a consulting
relationship.
(b) The Parent and the Acquiror shall, and shall cause their
respective Subsidiaries to, use reasonable efforts to cause
each individual listed on Schedule 10.07(b) to enter into an
employment agreement with a member of a Company Group on terms
reasonably satisfactory to the Acquiror. In this regard, the
Acquiror agrees to offer terms of employment to such
individuals that are as good or better than their existing
terms of employment taken in the aggregate for each employee.
Section 10.08. Related Party Contracts. Schedule 5.09(b) to the
Parent's Disclosure Letter provides a complete and accurate list of the Related
Party Contracts. To the extent that the Parent controls the parties to such
Related Party Contracts, the Parent agrees to cause such parties to terminate
each such Related Party Contract specified in Schedule 5.09(b) to the Parent's
Disclosure Letter prior to the Closing, such Related Party Contracts to be
replaced by the Transition Services Agreement and the Highway 6 Deed and the
Highway 6 Lease. Any contract that is between any member of the Parent Group and
any member of the Company Group but does not constitute a Principal Contract
shall terminate at the Closing.
Section 10.09 Litigation Support.
(a) If and for so long as the Acquiror, any Buyer or any member of
either Company Group is actively contesting or defending
against any charge, complaint, claim or demand (a "Claim") or
any action, suit, proceeding, investigation or hearing (an
"Action") based thereon in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or
transaction on or prior to the Closing Date involving any
member of either Company Group, the Parent and the Seller
shall, if neither the Parent nor any of its Subsidiaries is a
party to or involved in such Claim or Action, reasonably
cooperate with the contesting or defending party and its
counsel in the contest or defense, make reasonably available
their personnel and provide such testimony and reasonable
access to their Books and Records as shall be necessary in
connection with the contest or defense, the out-of-pocket
expense of which shall be for the account of the contesting or
defending party. The covenant contained in this subsection (a)
shall not apply to any matter that is subject to the
indemnification obligations of the parties under Article XII,
other than a Proceeding as to which an Indemnifying Party has
assumed the legal defense in accordance with subsection (d) of
Section 12.04 or under Section 12.05.
(b) If and for so long as the Parent, the Seller or any of their
respective Affiliates is actively contesting or defending
against any Claim or Action based thereon in connection with
(i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action,
failure to act or transaction involving any of the Businesses,
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the Acquiror, each Buyer and each member of each Company Group
shall, if neither the Acquiror nor any of its Subsidiaries is
a party to or involved in such Claim or Action, reasonably
cooperate with the contesting or defending party and its
counsel in the contest or defense, make reasonably available
their personnel and provide such testimony and reasonable
access to their Books and Records as shall be necessary in
connection with the contest or defense, the out-of-pocket
expense of which shall be for the account of the contesting or
defending party. The covenant contained in this subsection (b)
shall not apply to any matter that is subject to the
indemnification obligations of the parties under Article XII,
other than a Proceeding as to which an Indemnifying Party has
assumed the legal defense in accordance with subsection (d) of
Section 12.04 or under Section 12.05.
Section 10.10. Post-Closing Matters.
(a) From and after the Closing Date, each party hereto agrees to
execute such further instruments or documents as any other
party may from time to time reasonably request in order to
confirm or carry out the transactions contemplated by this
Agreement; provided, however, that no such instrument or
document shall increase a party's liability beyond that
contemplated hereby.
(b) From and after the Closing Date, the Acquiror and each Buyer
shall cause each member of each Company Group (other than any
Non-Controlled Entity), and shall use all commercially
reasonable efforts to cause each Non-Controlled Entity, to
maintain copies of all Books and Records in the possession of
such members of the Company Groups and the Non-Controlled
Entities at the Closing Date and shall prevent such members of
the Company Groups, and shall use all commercially reasonable
efforts to prevent each Non-Controlled Entity, from destroying
any of such Books and Records for a period of six years
following the Closing Date or, to the extent applicable, the
period specified in clause (i) of subsection 10.06(g). During
the period of retention of such Books and Records, the
Acquiror and the Buyers shall cause such members of each
Company Group, and shall use all commercially reasonable
efforts to cause each Non-Controlled Entity, (i) to grant to
the Parent or the appropriate Seller and its Representatives
reasonable cooperation, access and staff assistance at all
reasonable times and upon reasonable notice to all of such
Books and Records of such entities relating to the period
prior to the Closing Date (including workpapers and
correspondence with taxing authorities) that are not otherwise
protected by legal privilege, (ii) to afford the Parent or the
appropriate Seller and its Representatives the right, at the
Parent's expense, to take extracts therefrom and to make
copies thereof and (iii) to have access to the employees of
the members of the Company Groups, all to the extent
reasonably necessary or appropriate for general business
purposes, including the preparation of tax returns and the
handling of tax audits, disputes and litigation; provided,
however, that such requested cooperation, access and
assistance shall not unreasonably interfere with the normal
operations of the Businesses. In this regard, the Parent
acknowledges that the
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Non-Controlled Entities will not be under the direct or
indirect control of the Acquiror.
(c) To the extent that the Acquiror shall, directly or indirectly,
sell or otherwise transfer its interests in any member of
either Company Group subsequent to the Closing Date, the
Acquiror agrees to use all reasonable efforts to obtain from
the transferee of such interests an obligation to comply with
the provisions of subsection (b) of this Section, which
obligation shall be enforceable by the Parent as a third party
beneficiary.
ARTICLE XI
CONDITIONS TO FIRST CLOSING
Section 11.01. Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of the Parent and the Acquiror to
consummate the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the First Closing of the following conditions, any
or all of which may be waived by the parties hereto, in whole or in part, to the
extent permitted by applicable Law:
(a) No Governmental Authority or Court shall, following the date
of this Agreement, have enacted, issued, promulgated, enforced
or entered any Legal Requirement (other than any Legal
Requirement constituting or under foreign competition Laws)
(whether temporary, preliminary or permanent) that is in
effect and prohibits or renders illegal the transactions
contemplated hereby in a manner that is Material and adverse
to the Parent, the Acquiror or the Businesses.
(b) The waiting period under the HSR Act shall have expired or
been terminated and all Category 1 Requirements shall have
been satisfied.
(c) The parties hereto shall have obtained each Authorization
required under any applicable Regulatory Transfer Restriction
(other than any foreign competition Laws) required for
consummation of all or any part of the transactions
contemplated hereby.
(d) The Reorganization shall have been effected.
(e) The Parent shall have obtained each Third Person Consent
listed on Schedules 3.03 and 4.03 of the Parent's Disclosure
Letter, and the Acquiror shall have obtained each Third Party
Consent listed on Schedule 6.03 to the Acquiror's Disclosure
Letter.
(f) The Releases of Intercompany Indebtedness shall have been
executed and delivered as required by subsection (c) of
Section 2.06.
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Section 11.02. Additional Conditions to the Parent's Obligations. The
obligations of the Parent to effect the transactions contemplated hereby shall
be subject to the satisfaction at or prior to the First Closing of the following
conditions, any or all of which may be waived by the Parent, in whole or in
part, to the extent permitted by applicable Law:
(a) Each of the representations and warranties of the Acquiror
contained in this Agreement that is qualified as to
Materiality shall be true and correct in all respects, and
each of such representations and warranties that is not so
qualified shall be true and correct in all Material respects,
as of the date of this Agreement and as of the Closing Date as
though made again on and as of the Closing Date (except to the
extent that any such representations or warranties were made
as of a specified date, in which event such representations
and warranties shall continue on the Closing Date to have been
true and correct at and as of such specified date). The Parent
shall have received a certificate of the Chief Executive
Officer or the President and the Chief Financial Officer of
the Acquiror, dated the Closing Date, to such effect.
(b) The Acquiror shall have performed or complied in all Material
respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior
to Closing Date. The Parent shall have received a certificate
of the Chief Executive Officer or the President and the Chief
Financial Officer of the Acquiror, dated the Closing Date, to
such effect.
(c) The Acquiror, the Transitory Merger Sub or another Subsidiary
of the Acquiror, as appropriate, shall have executed and
delivered the Ancillary Agreements.
(d) No action, suit, arbitration or investigation (other than any
action, suit, arbitration or investigation disclosed in the
Parent's Disclosure Letter) shall be pending or threatened in
writing against any member of the Parent Group that is based
on or arises out of the transactions contemplated by this
Agreement by:
(i) any Governmental Authority that could reasonably be
expected to have a Material Adverse Effect on the
Parent Group and the success of which on the merits
is at least "reasonably possible" as that term is
used in Financial Accounting Standards Board's
Statement of Accounting Standards No. 5 ("FAS No.
5"); or
(ii) any third Person who claims damages that are Material
and the success of which on the merits is at least
"reasonably possible" as that term is used in FAS No.
5.
(e) The Parent shall have received an opinion from outside counsel
(which may consist of opinions from more than one outside
counsel) to the Acquiror, dated the Closing Date and in form
and substance substantially similar to the form thereof
attached hereto as Appendix X.
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Section 11.03. Additional Conditions to the Acquiror's Obligations. The
obligations of the Acquiror to effect the transactions contemplated hereby shall
be subject to the satisfaction at or prior to the First Closing of the following
conditions, any or all of which may be waived by the Acquiror, in whole or in
part, to the extent permitted by applicable Law:
(a) (i) Each of the representations and warranties of the
Parent and the Seller contained in this Agreement
that is qualified as to Materiality shall be true and
correct in all respects, and each of such
representations and warranties that is not so
qualified shall be true and correct in all Material
respects, as of the date of this Agreement and as of
the Closing Date as though made again on and as of
the Closing Date (except to the extent that any such
representations or warranties were made as of a
specified date, in which event such representations
and warranties shall continue on the Closing Date to
have been true and correct at and as of such
specified date). The Acquiror shall have received a
certificate of the Chief Executive Officer and the
Chief Financial Officer of the Parent, dated the
Closing Date, to such effect.
(ii) All of the representations and warranties of the
Parent and the Seller contained in this Agreement
shall be true and correct at and as of the Closing
Date as though made again on and as of the Closing
Date (except to the extent that any such
representations or warranties were made as of a
specified date, in which event such representations
and warranties shall continue on the Closing Date to
have been true and correct as of such specified
date), except where any untruth and incorrectness of
such representations and warranties could not, singly
or in the aggregate, be reasonably expected to have
an adverse effect measured in monetary terms of U.S.
$50,000,000 or more. Solely for purposes of
determining the monetary effect to which reference is
made in the next preceding sentence of this clause
(ii) of this subsection (a), the representations and
warranties of the Parent and the Seller contained in
this Agreement shall be deemed to have been made
without any qualification as to materiality and,
accordingly, all references in such representations
and warranties to "Material," "Materially, "Material
Adverse Effect," and similar terms and phrases
(including references to the dollar thresholds
therein) shall be deemed to be deleted therefrom.
(b) The Parent and the Seller shall have performed or complied in
all Material respects with all agreements and covenants
required by this Agreement to be performed or complied with by
it on or prior to Closing Date. The Acquiror shall have
received a certificate of the Chief Executive Officer and the
Chief Financial Officer of each of the Parent and the Seller,
dated the Closing Date, to such effect.
(c) None of the Authorizations required in order to consummate the
transactions contemplated by this Agreement are subject to any
conditions that, individually or
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in the aggregate, have had or could reasonably be expected to
have a Material Adverse Effect on the Acquiror or the
Businesses.
(d) The Parent or a Retained Subsidiary, as appropriate, shall
have executed and delivered each of the Ancillary Agreements.
(e) No action, suit, arbitration or investigation (other than any
action, suit, arbitration or investigation disclosed in the
Parent's Disclosure Letter) shall be pending or threatened in
writing against any member of either Company Group by:
(i) any Governmental Authority that could reasonably be
expected to have a Material Adverse Effect on the
Businesses and the success of which on its merits is
at least "reasonably possible" as that term is used
in FAS No. 5; or
(ii) any third Person who claims damages that are Material
and the success of which on the merits is at least
"reasonably possible" as that term is used in FAS No.
5.
(f) After giving effect to the forgiveness of Intercompany
Indebtedness contemplated by subsection (c) of Section 2.06
and subsection (c) of Section 2.07, the members of the Company
Groups at the First Closing shall in the aggregate have not
less than U.S. $30,000,000 (thirty million dollars) in cash
and cash equivalents (net of the aggregate amount of (i)
outstanding checks and overdrafts drawn on bank accounts of
all members of the Company Groups and (ii) any notes payable
by any member of either Company Group) and the Acquiror shall
have received a certificate from the Chief Financial Officer
of the Parent to such effect.
(g) The Acquiror shall have obtained an aggregate of U.S. $970
million of debt financing from the lenders referred to in the
Commitment Letters on the terms and structure contemplated by
the Commitment Letter Term Sheets attached to the Commitment
Letters.
(h) A member of a Company Group shall have entered into an
employment agreement with at least 23 out of the 35 people
listed on Schedule 10.07(b) to the Parent's Disclosure Letter
on terms reasonably satisfactory to the Acquiror, and such
employment agreements shall remain in full force and effect on
the Closing Date and shall not have been amended, modified or
restated without the consent of the Acquiror.
(i) No authoritative pronouncement shall have been issued
subsequent to the date of this Agreement by the SEC or by a
self regulatory board of the U.S. accounting profession that
would prohibit the Acquiror from (A) recording the
transactions contemplated by this Agreement as a
Recapitalization for financial reporting purposes or (B)
restructuring such transactions in a manner that would
preserve the
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economic effects of recording such transactions as a
Recapitalization for financial reporting purposes.
(j) The Parent shall have executed and delivered to the Acquiror
the Release contemplated by clause (i) of subsection 2.06(d)
and the Parent shall have prepared, executed and delivered to
the Acquiror the tax certificate referenced in clause (ii) of
subsection 2.06(d).
(k) The Parent shall have executed and delivered to the Acquiror
the Highway 6 Deed.
(l) The Acquiror shall have received an opinion from outside
counsel (which may consist of opinions from more than one
outside counsel) to the Parent, dated the Closing Date and in
form and substance substantially similar to the form thereof
attached hereto as Appendix XI.
(m) The Acquiror shall have received the financial statements
referred to in Section 8.10(b) prior to the First Closing.
ARTICLE XII
INDEMNIFICATION
Section 12.01. Survival of Representations, Warranties, Covenants and
Agreements.
(a) Except as set forth in subsection (b) of this Section, the
representations, warranties, covenants and agreements of each
party hereto shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
any other party hereto, any Person controlling any such party
or any of their officers, directors, representatives or agents
whether prior to or after the execution of this Agreement.
(b) (i) The representations and warranties of the Parent
contained in Articles III and IV and in Sections
5.01, 5.02 and 5.03 and those of the Acquiror
contained in Article VI shall survive the Closings
and any investigation by the parties with respect
thereto without contractual restriction, but the
representations and warranties of the Parent and the
Acquiror contained in Article VII shall terminate at
the Closing and be of no further force or effect.
(ii) The representations and warranties of the Parent
contained in Article V (other than those in Sections
5.01, 5.02, 5.03, 5.08, 5.10, 5.11 and 5.12) shall
survive the Closings and any investigation by the
parties with respect thereto, but shall terminate and
be of no further force or effect on the date that is
90 days following the completion of an audit of the
Businesses or portions thereof for the calendar year
in which the Closing Date shall occur (but in any
event no later than June 30, 2002).
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(iii) The representations and warranties of the Parent
contained in Section 5.10 and Section 5.08 shall
survive the Closings and any investigation by the
parties with respect thereto until the expiration of
the applicable statute of limitations (including
extensions thereof) plus 90 days.
(iv) The representations and warranties of the Parent
contained in Section 5.11 shall survive the Closings
and any investigation by the parties with respect
thereto, but shall terminate and be of no further
force or effect on the fifth anniversary of the
Closing Date.
(v) The representations and warranties of the Parent
contained in Section 5.12 shall survive the Closings
and any investigation by the parties with respect
thereto, but shall terminate and be of no further
force or effect on the third anniversary of the
Closing Date.
(vi) Notwithstanding any of the foregoing clauses of this
subsection (b), any such representation or warranty
as to which a bona fide claim relating thereto is
asserted in writing (which states with specificity
the basis therefor) in accordance with Section 12.04
or Section 12.05 during such applicable survival
period shall, with respect only to such claim,
continue in force and effect beyond such applicable
survival period pending resolution of the claim. The
covenants and agreements in this Article XII shall
survive the Closings and shall remain in full force
and effect for such period as is necessary to resolve
any bona fide claim made with respect to any
representation or warranty contained in this
Agreement during the survival period thereof. The
remaining covenants and agreements of the parties
hereto contained in this Agreement shall survive the
Closings without any contractual limitation on the
period of survival.
Section 12.02. General Indemnification by the Parent.
(a) If the transactions contemplated hereby to occur at the
Closings are effected and subject to the provisions of
subsection (b) of Section 12.01, the Parent and the Seller,
jointly and severally, hereby agree (each, in such capacity,
an "Indemnifying Party"), from and after the Closing Date, to
indemnify and hold harmless the Acquiror, the Buyers, their
Affiliates and the directors, officers and employees of such
Persons (each, in such capacity, an "Indemnified Party")
against any losses, claims, demands, damages, judgments,
settlements, liabilities, charges and deficiencies, in each
case whether arising out of third party claims or otherwise,
and any reasonable legal or other expenses incurred in
connection with investigating or defending against the
foregoing (collectively, "Losses") that such Indemnified Party
shall actually incur, to the extent that such Losses (or
actions, suits or proceedings in respect thereof and any
appeals therefrom ("Proceedings")):
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(i) arise out of or result from the untruth or breach of
any representation or warranty made in Article III,
IV or V for the benefit of the Acquiror; or
(ii) arise out of or result from the nonperformance in
accordance with its terms of any covenant or
agreement made herein for the benefit of the
Indemnified Party by the Indemnifying Party; or
(iii) arise out of or result from the nonpayment or
nonperformance of any Excluded Liability; or
(iv) arise out of any Taxes payable as a result of the
transactions contemplated by the Reorganization other
than in connection with the steps listed in, and
actions contemplated by, Section 10.05; provided,
however, that the Parent shall be entitled to any net
refunds of any such Taxes (including interest
thereon);
(v) arise out of or result from any Indemnifiable
Environmental Matter to the extent that the Acquiror
has given notice to the Parent of any claim for
indemnification pursuant to Section 12.04(a) prior to
the fifth anniversary of the Closing Date; provided,
however, that the Indemnifying Parties shall not be
obligated to indemnify any Indemnified Party for that
portion of any Losses described in clause (a), (c) or
(e) of the definition of "Indemnifiable Environmental
Matters" that are incurred by an Indemnified Party as
a result of its own negligence; or
(vi) arise out of the failure to obtain any Third Person
Consent that continues at the Closing Date to be
required under any Agreement identified on Schedule
5.02(c) to the Parent's Disclosure Letter.
Notwithstanding the foregoing, the Indemnifying Party shall be
liable to the Indemnified Party under this Section 12.02 only
if and to the extent that the amount of Losses incurred by the
Indemnified Party exceeds U.S. $15,000,000 (fifteen million
dollars) in the aggregate (the "Deductible Amount"); provided,
however, that:
(A) no Loss subject to indemnification pursuant
to clause (a), (c) or (e) of the definition
of Indemnifiable Environmental Matters, no
Loss subject to indemnification for breach
of Section 5.11 pursuant to Section
12.02(a)(i), and no Loss subject to
indemnification as an Excluded Liability
shall be subject to nor counted toward the
Deductible Amount;
(B) no Loss or aggregation of similar Losses
based on the same or substantially similar
facts and circumstances shall be subject to
indemnification pursuant to clause (i) of
subsection (a) of Section 12.02 unless it
involves more than (1) U.S. $500,000 (five
hundred
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thousand dollars), in the case of any such
Loss or Losses based on facts and
circumstances of which officers of the
Parent listed on Schedule 12.02(a)(B) to the
Parent's Disclosure Letter had no actual
knowledge on the date of this Agreement or
(2) U.S. $100,000 (one hundred thousand
dollars) in the case of any such Loss or
Losses based on facts and circumstances of
which officers of the Parent listed on
Schedule 12.02(a)(B) to the Parent's
Disclosure Letter had actual knowledge on
the date of this Agreement;
(C) the amount of such Losses that are subject
to indemnification hereunder shall not
exceed U.S.$950,000,000; and
(D) the Losses incurred by an Indemnified Party
shall, for purposes of determining the
maximum amount or threshold level thereof in
accordance with this sentence and otherwise
with respect to the obligations of the
Indemnifying Parties hereunder, be offset by
(i) the proceeds of any insurance received
directly or indirectly by the Indemnified
Party with respect thereto and (ii) the
amount of any income tax benefit actually
realized by the Indemnified Party with
respect thereto.
For purposes of clause (i) of this subsection (a), the
representations and warranties of the Parent contained in this
Agreement shall, except for each instance in which a
representation and warranty regarding the completeness or
accuracy of a list or Schedule to the Parent's Disclosure
Letter is qualified as to materiality, be deemed to have been
made without any qualification as to materiality and,
accordingly, all references in such representations and
warranties to "Material", "Materially," "Material Adverse
Effect" and similar terms and phrases (including references to
dollar thresholds therein) shall be deemed to be deleted
therefrom.
(b) Notwithstanding anything to the contrary in this Agreement,
the liability of the Parent as an Indemnifying Party under
this Agreement shall also be limited as follows:
(i) The amount payable by the Parent in respect of any
Losses incurred by an entity partially owned,
directly or indirectly, by an Indemnified Party shall
be determined by multiplying the total amount that
would otherwise be payable in respect of such Losses
by a percentage equal to the percentage of the Equity
Securities of such entity transferred to the
Acquiror, directly or indirectly, pursuant to this
Agreement.
(ii) The Parent shall not be liable for any Losses
resulting from a breach of any of the representations
and warranties set forth in Articles III, IV or V of
this Agreement to the extent that:
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(A) the liability for such breach occurs or is
increased as a result of the adoption or
imposition of any Law, Regulation or Order
not in force at the date of this Agreement
or as a result of any increase in rates of
taxation after the date of this Agreement;
or
(B) the Losses would not have arisen but for a
change in accounting policy or practice of
the Acquiror or any member of the Company
Groups after the Closing Date (other than
changes required for any such accounting
policy or practice to comply with U.S. GAAP
as in effect on the Closing Date).
(iii) The Parent shall be liable for any Loss resulting
from a breach of any of the representations and
warranties set forth in Section 5.08 only if and to
the extent that such Loss is not offset by a deferred
Tax asset that would properly be reflected in the
Closing Financial Statements. Notwithstanding the
foregoing, if the amount of such Loss exceeds $20.0
million, the amount of such Loss shall only be offset
by the present value of any such deferred Tax asset,
which present value shall be determined (A) using a
discount rate equal to DEGI's average cost of capital
at the date of the Loss and (B) on the assumption
that the corresponding Tax benefit is utilized as
soon as possible and at the maximum rate of Tax under
applicable Laws, without regard to any limitations
arising from any Tax attributes of the taxpayer.
(iv) The Parent shall not be liable for any Loss incurred
by the Acquiror, the Buyers or any member of either
Company Group that arises out of or results from the
implementation of the steps of the Reorganization
referred to in the last sentence of Section 10.05 or
from any action taken at the direction of the
Acquiror or any individual that the Acquiror had
identified in written notice to the Parent.
(c) Notwithstanding anything herein to the contrary, to the extent
that the Acquiror waives satisfaction of one or more
conditions set forth in subsection (a) or (b) of Section
11.03, which conditions were not satisfied due to one or more
events, conditions or circumstances that occurred after the
date of this Agreement and that were specifically disclosed in
writing to the Acquiror prior to the Closing Date, the Parent
shall not have any liability hereunder for such matter or
matters to the extent so disclosed.
(d) The procedures set forth in Section 12.04 shall govern the
disposition of claims for indemnification brought pursuant to
this Section 12.02 except that any claim for indemnification
regarding an Indemnifiable Environmental Matter shall, in
addition, be subject the provisions of Section 12.05. In the
event of a conflict between the provisions of Section 12.04
and Section 12.05, the provisions of the latter shall govern.
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Section 12.03. General Indemnification by the Acquiror.
(a) If the transactions contemplated hereby to occur at the
Closings are effected and subject to the provisions of
subsection (b) of Section 12.01, the Acquiror hereby agrees
(in such capacity, an "Indemnifying Party"), from and after
the Closing Date, to indemnify and hold harmless the Parent
and the Seller, their Affiliates, directors, officers and
employees (in such capacity, an "Indemnified Party") against
any Losses that such Indemnified Party shall actually incur,
to the extent that such Losses (or Proceedings):
(i) arise out of or result from the untruth or breach of
any representation or warranty made in Article VI for
the benefit of the Parent; or
(ii) arise out of or result from the nonperformance in
accordance with its terms of any covenant or
agreement made herein for the benefit of the
Indemnified Party by the Indemnifying Party; or
(iii) arise out of or result from any acts or omissions to
act after the Closing Date by any Buyer or any member
of either Company Group hereunder; or
(iv) arise out of or result from the nonpayment or
nonperformance of any of the Assumed Obligations; or
(v) arise out of or result from the implementation of the
steps of the Reorganization referred to in the last
sentence of Section 10.05 or from any actions taken
at the direction of the Acquiror or any individual
that the Acquiror has identified in written notice to
the Parent; or
(vi) arise out of or result from any matter set forth in
clause (i) through (vii), inclusive, of subsection
(d) of Section 12.05 arising after the Closing Date.
Notwithstanding the foregoing, the Indemnifying Party shall be
liable to the Indemnified Party under this Section 12.03 only
in the event and to the extent that the amount of Losses
incurred by the Indemnified Party exceeds the Deductible
Amount; provided, however, that:
(A) no Loss subject to indemnification pursuant
to clause (iii) or (iv) of this Section
shall be subject to or counted toward the
Deductible Amount;
(B) the amount of such Losses that are subject
to indemnification hereunder shall not
exceed $950,000,000 (nine hundred fifty
million dollars); and
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(C) the Losses incurred by an Indemnified Party
shall, for purposes of determining the
maximum amount or threshold level thereof in
accordance with this sentence and otherwise
with respect to the obligations of the
Indemnifying Parties hereunder, be offset by
(i) the proceeds of any insurance received
directly or indirectly by the Indemnified
Party with respect thereto and (ii) the
amount of any income tax benefit actually
realized by the Indemnified Party with
respect thereto.
For purposes of clause (i) of this subsection (a), the
representations and warranties of the Acquiror contained in
this Agreement shall, except for each instance in which a
representation and warranty regarding the completeness or
accuracy of a list or Schedule to the Acquiror's Disclosure
Letter is qualified as to materiality, be deemed to have been
made without any qualification as to materiality and,
accordingly, all references in such representations and
warranties to "Material", "Materially," "Material Adverse
Effect" and similar terms and phrases (including references to
dollar thresholds therein) shall be deemed to be deleted
therefrom.
(b) Notwithstanding anything to the contrary in this Agreement,
the Acquiror shall not be liable for any Losses resulting from
a breach of any of the representations and warranties set
forth in Article VI of this Agreement to the extent that the
liability for such breach occurs or is increased as a result
of the adoption or imposition of any Law, Regulation or Order
not in force at the date of this Agreement or as a result of
any increase in rates of taxation after the date of this
Agreement.
(c) Notwithstanding anything herein to the contrary, to the extent
that the Parent waives satisfaction of one or more conditions
set forth in subsection (a) or (b) of Section 11.02, which
conditions were not satisfied due to one or more events,
conditions or circumstances that occurred after the date of
this Agreement and that were specifically disclosed in writing
to the Parent prior to the Closing Date, the Acquiror shall
not have any liability hereunder for such matter or matters to
the extent so disclosed.
(d) The procedures set forth in Section 12.04 shall govern the
disposition of claims for indemnification brought pursuant to
this Section 12.03.
Section 12.04. Procedures.
(a) Promptly after (i) discovery by an Indemnified Party hereunder
of a Loss or (ii) receipt by the Indemnified Party of notice
of the commencement of any Proceeding, in each case, against
which it believes it is indemnified under this Article, the
Indemnified Party shall, if a claim in respect thereto is to
be made against the Indemnifying Party under this Article,
notify the Indemnifying Party in writing of the discovery or
commencement thereof (the "Indemnification Notice"); provided,
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however, that the omission so to notify the Indemnifying Party
shall not relieve it from any liability that it may have to
the Indemnified Party to the extent that the Indemnifying
Party is not prejudiced by such omission; and provided,
further, that with respect to any Loss or Proceeding in
existence on the Closing Date with respect to an Excluded
Liability or with respect to any Indemnifiable Environmental
Matter to which reference is made in clause (a), (c) or (e) of
the definitions of that term, the Acquiror shall be deemed to
have given notice thereof to the Parent pursuant to this
subsection (a) and the Parent shall be deemed to have
responded to such notice in accordance with clause (ii) of
subsection (b) of this Section, all effective as of the
Closing Date.
(b) The Indemnifying Party shall, within thirty (30) days after
receipt of an Indemnification Notice, either (i) in writing
acknowledge liability, as between the Indemnifying Party and
the Indemnified Party, for such Loss or the amount in
controversy in such Proceeding and pay the Indemnified Party
the amount of such Loss or the amount in controversy in such
Proceeding in cash in immediately available funds (or
establish by agreement with the Indemnified Party an
alternative payment arrangement), (ii) in writing acknowledge
liability, as between the Indemnifying Party and the
Indemnified Party, for such Loss or the amount in controversy
in such Proceeding but disavow the validity of the Loss or
Proceeding or the amount thereof and, in the case of a
Proceeding to the extent that it shall so desire in accordance
with subsection (d) of this Section, assume the legal defense
thereof or (iii) in writing object (or reserve the right to
object until additional information is obtained) to the claim
for indemnification or the amount thereof and set forth the
grounds therefor in reasonable detail. If the Indemnifying
Party does not respond to the Indemnified Party as provided in
this subsection within such thirty (30) day period, the
Indemnifying Party shall be deemed to have acknowledged its
liability for such indemnification claim in accordance with
clause (i) of this subsection and the Indemnified Party may
exercise any and all of its rights under applicable Law to
collect such amount.
(c) An Indemnifying Party shall not, without the prior written
consent of the Indemnified Party (which consent shall not be
unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any pending or
threatened Proceeding in respect of which indemnification or
contribution is sought hereunder. If the Indemnifying Party
has responded to the Indemnified Party pursuant to clause (i)
of subsection (b) of this Section, the Indemnified Party may
settle or compromise or consent to the entry of any judgment
with respect to the Proceeding that was the subject of notice
to the Indemnifying Party pursuant to subsection (b) of this
Section without the consent of the Indemnifying Party (but no
such settlement, compromise or consent shall increase the
indemnification obligation of the Indemnifying Party to which
it has consented pursuant to clause (i) of subsection (b) of
this Section). Except as otherwise provided in the immediately
preceding sentence and in subsection (d) of this Section, an
Indemnified Party shall not, without the prior written consent
of the Indemnifying Party (which consent shall not be
unreasonably
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withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened Proceeding,
but, if such Proceeding is settled or compromised or if there
is entered any judgment with respect to any such Proceeding,
in either case with the consent of the Indemnifying Party, or
if there be a final judgment for the plaintiff in any such
Proceeding, the Indemnifying Party shall indemnify and hold
harmless any Indemnified Party from and against any Loss by
reason of such settlement, compromise or judgment in
accordance with the other provisions of this Article XII.
(d) If a Proceeding shall be brought against an Indemnified Party
and it shall notify the Indemnifying Party thereof in
accordance with subsection (a) of this Section, the
Indemnifying Party shall, if it shall have responded to such
notice in accordance with clause (ii) of subsection (b) of
this Section, be entitled to assume the legal defense thereof
at the expense of the Indemnifying Party with counsel
reasonably satisfactory to the Indemnified Party. The
Indemnified Party shall have the right to employ separate
counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at
the expense of the Indemnified Party unless (i) the employment
of such counsel shall have been specifically authorized in
writing by the Indemnifying Party or (ii) the Indemnifying
Party shall have failed to assume the defense of such action
or (iii) the named parties to any such Proceeding (including
any impleaded parties) include both the Indemnified Party and
the Indemnifying Party, and the Indemnified Party shall have
been advised by such counsel that there is one or more legal
defenses available to it that are different from or additional
to those available to the Indemnifying Party. In any such
case, the Indemnifying Party shall not, in connection with any
one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees
and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for the Indemnified Party.
Except as aforesaid, after notice from the Indemnifying Party
to the Indemnified Party of its election to assume the defense
of such claim or such action, the Indemnifying Party shall not
be liable to the Indemnified Party under this Section for any
attorney's fees or other expenses (except reasonable costs of
investigation) subsequently incurred by the Indemnified Party
in connection with the defense thereof. If the Indemnifying
Party does not assume the defense of a Proceeding as to which
it has acknowledged liability, as between itself and the
Indemnified Party, pursuant to clause (ii) of subsection (b)
of this Section, the Indemnified Party may require the
Indemnifying Party to reimburse it on a current basis for its
reasonable expenses of investigation, reasonable attorney's
fees and expenses and reasonable out-of-pocket expenses
incurred in the defense thereof and the Indemnifying Party
shall be bound by the result obtained with respect thereto by
the Indemnified Party.
(e) In the case of a Loss as to which the Indemnifying Party shall
have responded pursuant to clause (iii) of subsection (b)
above, the parties shall attempt in good faith to resolve
their differences for a period of sixty (60) days following
receipt by the Indemnified Party of the response of the
Indemnifying Party pursuant to subsection
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(b) above and, if the parties are unable to resolve their
differences within such period, the Indemnified Party may
submit the matter to arbitration in accordance with the
provisions of Section 14.10.
Section 12.05. Special Environmental Indemnification Provisions.
(a) The Parent shall have the sole and exclusive right to control
the defense, response, proceedings, settlement and resolution
of any Indemnifiable Environmental Matters, including any
investigations, removals, remediations, response actions,
enforcement actions or administrative proceedings; provided
that the Parent shall not agree to any response, settlement or
resolution that unreasonably interferes with any operations of
the Business. The Acquiror shall cooperate in all reasonable
ways with the Parent in the defense, contest, settlement of or
prosecution of any Indemnifiable Environmental Matters.
(b) With respect to any Indemnifiable Environmental Matters that
require corrective actions, the Parent's indemnification
obligations under clause (v) of subsection (a) of Section
12.02 shall be applicable to any investigation, removal,
remediation or other response action ("Environmental
Activities") only if and to the extent the conditions giving
rise to such matter require reporting to a Governmental
Authority and require corrective action under applicable
Environmental Laws or, if such conditions were known to a
Governmental Authority having jurisdiction over the matter,
the Governmental Authority would be entitled to bring an
enforcement action to require the Environmental Activities,
but then only to the extent necessary to bring the appropriate
member of a Company Group into compliance with the
requirements of applicable Environmental Laws in effect as of
the Closing Date. (The Acquiror shall be responsible for any
additional Environmental Activities which may be required by
Environmental Laws enacted or adopted after the Closing Date.)
The Parent, in its sole discretion, shall determine the
applicable cleanup standard for Covered Known Hazardous
Materials Contamination and Unknown Hazardous Materials
Contamination that are Indemnifiable Environmental Matters, in
consultation with the Agency. Neither the Acquiror, any Buyer
nor any member of a Company Group may use the properties of
any member of any Company Group for any residential, health
care, childcare or school purposes. The Acquiror acknowledges
and agrees that any title transfer documents relating to the
Real Property delivered to the Acquiror may contain
restrictions on the use of the Real Properties. The Acquiror
further agrees and binds itself to execute and file any and
all documents restricting the use of the properties of the
members of the Company Groups as may be required in connection
with the Environmental Activities. Notwithstanding anything in
this Section 12.05 to the contrary, no cleanup standards, use
restrictions or institutional controls shall be required that
unreasonably interfere with any operations of the Business.
The Acquiror shall not encourage or invite any Agency to
require any Environmental Activities or enforcement action;
provided, however, that the Acquiror may cause the Buyers and
the members of the Company
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Groups to comply with all applicable Environmental Laws in the
use, ownership or occupation of the Real Property or the
operations of the Businesses.
(c) The Acquiror acknowledges that, prior to the Closing Date, the
Parent may have initiated Environmental Activities as a result
of the Parent's obligation to applicable Agencies, and that
such Environmental Activities may continue after the Closing
Date. The Acquiror further acknowledges that any Environmental
Activities conducted after the Closing Date in accordance with
this Section 12.05 or continued from Environmental Activities
prior to the Closing Date may involve the filing of land use
and deed restrictions, institutional and engineering controls,
groundwater use restrictions, soil management requirements,
access and easement rights, and restrictive covenants
(including a prohibition against installation of water xxxxx
on the properties of the members of the Company Groups). The
Acquiror shall at all times cooperate with the Parent in
obtaining and maintaining any necessary documents, permits or
conditions, and the Acquiror shall not take any action in
contravention of such land use or deed restrictions or other
requirements. The Acquiror further acknowledges that the
Parent's environmental obligations hereunder may include
sampling and excavating soil, the sampling, operation and
maintenance of groundwater monitoring and recovery xxxxx,
associated piping, groundwater pumping and treatment equipment
and other facilities or equipment. The Acquiror shall, without
further compensation, costs or fees to the Parent, grant and
provide, after reasonable advance notice, all necessary access
to the Parent, the Parent's employees, agents, contractors,
subcontractors, representatives and Agency representatives to
enter onto the properties of the members of the Company Groups
after the Closing Date to undertake any Environmental
Activities. The Parent's rights of access to use the
properties of the members of the Company Groups are
non-exclusive and shall endure as long as is necessary to
complete the Environmental Activities. The Parent shall, to
the extent practicable and consistent with sound investigation
and remediation practices, undertake the Environmental
Activities in a manner that will not unreasonably interfere
with the use of the properties of the members of either of the
Company Groups and shall indemnify and hold harmless the
Acquiror against any Losses arising out of such rights of
access except for any such Losses that arise out of or result
from the negligence of the Acquiror or any Persons acting on
its behalf. The Acquiror shall cause the Buyers and the
members of the Company Groups to take all necessary
precautions to avoid any damage to or loss of any equipment or
facilities placed on the properties of the members of the
Company Groups by the Parent as part of the Environmental
Activities, and shall pay for all damages to or loss of such
equipment or facilities resulting from any negligent acts or
omissions of the Buyers or members of the Company Groups, or
their ownership, use or occupancy of their properties.
(d) The Parent's indemnity obligations with respect to
Indemnifiable Environmental Matters under clause (v) of
subsection (a) of Section 12.02 shall not apply to any Losses:
(i) caused by the Acquiror's inspection of the properties of
the members of the Company Groups; (ii) arising from the use
or occupancy of the properties of the
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members of the Company Groups by the Acquiror or any of its
Affiliates prior to the Closing Date; (iii) with respect to
any Indemnified Environmental Matter known to Acquiror,
arising from, caused by, or exacerbated by the use, occupancy
or ownership of the Real Property or the operation of the
Businesses or omissions of the Acquiror after the first
anniversary of Acquiror gaining such knowledge, (iv) arising
after the expiration of any applicable indemnity period, (v)
based on Hazardous Materials Contamination, Environmental
Compliance Matters or other conditions that did not exist as
of the Closing Date; (vi) that constitute Known Hazardous
Materials Contamination that is not Covered Known Hazardous
Materials Contamination; (vii) incurred in connection with the
management, removal or abatement of asbestos-containing
material from any structure or equipment during any demolition
or renovation of any facility or structure after the Closing
Date; or (viii) arising from the migration of Hazardous
Materials or Hazardous Materials Contamination onto the Real
Property of any members of any of the Company Groups from an
offsite source. The Parent, may at its own cost and option,
participate in the defense of any such claim.
(e) Except as set forth in this Article XII, the Acquiror
unconditionally releases the Parent from any and all Losses
arising out of or resulting from any Hazardous Materials or
Hazardous Materials Contamination, Environmental Compliance
Matters or related environmental conditions (including Known
Hazardous Materials Contamination, Unknown Hazardous Materials
Contamination Known Environmental Compliance Matters, Unknown
Environmental Compliance Matters and Indemnifiable
Environmental Matters, regardless of how or when discovered).
Provided that the Parent is in material compliance with its
obligations under this Article XII, the Acquiror hereby
covenants and agrees that neither the Acquiror nor any
Affiliate under its control will file suit or name the Parent
or any of its Affiliates in any lawsuit arising from any of
the foregoing. The Acquiror understands and expressly agrees
that releases set forth in this Section:
(i) shall constitute releases of liability under all
applicable Environmental Laws, including the United
States Comprehensive Environmental Response,
Compensation and Liability Act, as currently in
effect, the United States Resource Conservation
Recovery Act, as currently in effect, and any similar
or equivalent laws in the jurisdiction of any
Governmental Authority in which any properties of any
member of a Company Group are located;
(ii) shall constitute an assumption of future liabilities;
(iii) are made with the knowledge of the prior commercial
or industrial use of the properties of the members of
the Company Groups and the possible presence of
Hazardous Materials on such properties; and
(iv) are supported by separate consideration, the receipt
and sufficiency of which are expressly acknowledged
and confessed by the Acquiror.
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Section 12.06. Punitive Damages. Neither party to this Agreement nor
any of its Affiliates or Representatives shall be liable to any other party
hereto or any of its Affiliates or Representatives for claims for punitive,
special, exemplary or incidental damages, regardless of whether a claim is based
on contract, tort (including negligence), strict liability, violation of any
applicable deceptive trade practices act or similar Law or any other legal or
equitable principle. No party shall be entitled to rescission of this Agreement
as a result of breach of any other party's representations, warranties,
covenants or agreements, or for any other matter.
Section 12.07. Failure of Acquiror to Close. The Parent and the
Acquiror have agreed that if the Acquiror shall fail to consummate the
transactions contemplated hereby for any reason under its control that does not
confer upon the Acquiror a right to terminate this Agreement under Section
13.01, the Acquiror shall pay to the Parent, on or before the fifth (5th)
Business Day following the date on which the Acquiror failed to consummate such
transactions in violation of the terms of this Agreement or, if such date is not
determinable, the Termination Date, an amount in cash in U.S. Dollars equal to
$20 million less professional fees and expenses incurred on behalf of the
Acquiror prior to, on or after the date hereof by wire transfer of immediately
available funds to the wire transfer address of Parent provided in written
instructions to the Acquiror. Such amount shall be deemed to be liquidated
damages and, in that regard, it is expressly stipulated by the parties that the
actual amount of any damages resulting from the Acquiror's failure to complete
the transactions contemplated by this Agreement would be difficult if not
impossible to determine accurately because of the unique nature of this
Agreement, the unique nature of the Securities, the uncertainties of the
relevant markets in which the Businesses operate and differences of opinion with
respect to such matters, and that the liquidated damages provided for herein are
a reasonable estimate by the parties of such damages.
Section 12.08. No Right of Contribution. After the Closing Date, no
member of either Company Group shall be obligated to indemnify either the
Acquiror, any Buyer, the Parent or the Seller on account of the breach of any
representation or warranty or the nonfulfillment of any covenant or agreement of
the Parent or the Seller; and neither Parent nor the Seller shall have any right
of contribution against any member of either Company Group for any such breach
or nonfulfillment.
Section 12.09. Specific Performance. The Parent hereby agrees that
irreparable damage would occur to the Acquiror if the Parent failed to
consummate the transactions contemplated hereby in accordance with the terms of
this Agreement, and, accordingly, the Parent and the Acquiror agree that the
Acquiror shall be entitled to enforce specifically the performance of the
transactions contemplated hereby in the United States federal court for the
Southern District of New York or in any other court having jurisdiction without
posting bond or other security, this being in addition to any other remedy to
which it is entitled at law or in equity.
Section 12.10. Sole Remedy. From and after the Closing Date, the
provisions of this Article XII shall, except as provided in subsection 2.09(g),
be the sole and exclusive remedy of each party hereto for (i) any breach of the
other party's representations or warranties contained in this
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Agreement or (ii) any breach of the other party's covenants or agreements
contained in this Agreement (other than any covenant or agreement to be
performed after the Closing Date).
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVER
Section 13.01. Termination. This Agreement may be terminated at any
time prior to the Closing Date:
(a) by mutual written consent of the Parent and the Acquiror;
(b) by the Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Acquiror set forth in
this Agreement or if any representation or warranty of the
Acquiror shall have become untrue, in either case, such that
the conditions set forth in subsection (a) or (b) of Section
11.02 would not be satisfied (a "Terminating Acquiror
Breach"); provided, however, that, if such Terminating
Acquiror Breach is curable by the Acquiror through the
exercise of its reasonable efforts and for so long as the
Acquiror continues to exercise such reasonable efforts, the
Parent may not terminate this Agreement under this subsection
(b) until September 30, 2001;
(c) by the Acquiror, upon a breach of any representation,
warranty, covenant or agreement on the part of the Parent set
forth in this Agreement or if any representation or warranty
of the Parent shall have become untrue, in either case, such
that the conditions set forth in subsection (a) or (b) of
Section 11.03 would not be satisfied (a "Terminating Parent
Breach"); provided, however, that, if such Terminating Parent
Breach is curable by the Parent through the exercise of its
reasonable efforts and for so long as the Parent continues to
exercise such reasonable efforts, the Acquiror may not
terminate this Agreement under this subsection (c) until
September 30, 2001;
(d) by either the Parent or the Acquiror, if the Closing Date
contemplated hereby shall not have occurred on or before June
30, 2001 (the "Termination Date"); provided, however, that the
right to terminate this Agreement under this subsection (d)
shall not be available to either Party whose failure to
fulfill any obligation under this Agreement has been, directly
or indirectly, the cause of, or resulted in, the failure of
the Closing Date to occur on or before such date; provided,
further, that, if on the Termination Date the conditions to
the First Closing set forth in subsection (b) or (c) of
Section 11.01 shall not have been fulfilled but all other
conditions to the First Closing have been fulfilled or are
capable of being fulfilled, then the Termination Date shall be
extended to September 30, 2001.
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The right of any party hereto to terminate this Agreement pursuant to
this Section 13.01 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
Person controlling any such party or any of their Representatives, whether prior
to or after the execution of this Agreement.
Section 13.02. Effect of Termination. If terminated pursuant to Section
13.01, this Agreement shall, except for Sections 9.01, 10.05, 10.07(a), 12.06,
12.07 and 12.09 of this Agreement, forthwith become void and (i) there shall be
no liability on the part of the Parent, the Seller, the Acquiror or any of their
respective officers or directors to any other party and (ii) all rights and
obligations of any party hereto shall cease; provided, however, that nothing
herein shall relieve the Parent, the Seller or the Acquiror from liability for
any misrepresentation of any representation and warranty or breach of any
covenant or agreement under this Agreement occurring prior to the date of such
termination.
Section 13.03. Amendment. This Agreement may not be amended except by
an instrument in writing authorized by the Parent, the Seller and the Acquiror
and signed by the Parent, the Seller and the Acquiror.
Section 13.04. Waiver. Either the Parent or the Acquiror hereto may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties of the other parties contained herein or in any document delivered
pursuant hereto and (c) waive compliance by the other parties with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party to be
bound thereby.
ARTICLE XIV
MISCELLANEOUS
Section 14.01. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given if delivered personally, mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses or
sent by electronic transmission to the telecopier number specified below:
If to the Parent, to:
Halliburton Company
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx
Executive Vice President
and Chief Financial Officer
Telephone: 713/000-0000
Telecopier: 713/676-7799
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Copy to:
Xxxxxx X. Xxxxxxx
Executive Vice President
and General Counsel
Halliburton Company
0000 Xxxxxxx Xxxxx
000 Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000-0000
Telephone: 214/000-0000
Telecopier: 214/978-2658
If to the Acquiror, to:
c/o First Reserve Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Copy to:
Xxx Xxxxxxx
First Reserve Corporation
0000 Xxxxxxxxxx Xxxxxx, #0000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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and to:
Odyssey Investment Partners, LLC
000 Xxxx Xxxxxx
Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or to such other address or telecopier number as the Parent or the Acquiror may,
from time to time, designate in a written notice given in a like manner. Notice
given by telecopier shall be deemed delivered on the day the sender receives
telecopier confirmation that such notice was received at the telecopier number
of the addressee. Notice given by mail as set out above shall be deemed to be
delivered on the fifth Business Day following deposit in the U.S. mail.
Section 14.02. Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 14.03. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
Section 14.04. Entire Agreement. This Agreement (together with the
Ancillary Agreements, the Annexes and Appendices hereto, the Parent's Disclosure
Letter and the Acquiror's Disclosure Letter) constitutes the entire agreement of
the parties, and supersedes all prior agreements, deliveries, disclosures and
undertakings, both written and oral, among the parties, with respect to the
subject matter hereof.
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Section 14.05. Assignment. Without the prior written consent of the
other party hereto, the rights and obligations of a party hereto under this
Agreement may not be assigned except by operation of Law; provided, however,
that the Acquiror may (i) assign its rights and obligations hereunder without
the consent of any other party hereto to any wholly owned Subsidiary of the
Acquiror, in which event the Acquiror shall remain liable for all of its
obligations under this Agreement, and the assignee shall, together with the
Acquiror, be jointly and severally liable for such obligations and (ii) assign
as collateral its rights and obligations hereunder without the consent of any
other party hereto to the Lenders referred to in the Commitment Letters or a
collateral agent acting on their behalf.
Section 14.06. Successors; Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and their
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
Section 14.07. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty, covenant or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. Except as set
forth in Section 12.10, all rights and remedies existing under this Agreement
are cumulative with, and not exclusive of, any rights or remedies otherwise
available.
Section 14.08. Disclosure Letters. Each of the Parent's Disclosure
Letter and the Acquiror's Disclosure Letter have been arranged in paragraphs or
schedules corresponding to the relevant Sections of this Agreement. Any matter
disclosed by the Parent in the Parent's Disclosure Letter or by the Acquiror in
the Acquiror's Disclosure Letter pursuant to any Section of this Agreement shall
be deemed to have been disclosed by such party for purposes of each other
Section of this Agreement to which such disclosure would reasonably relate.
Section 14.09. Governing Law. This Agreement shall be construed (both
as to validity and performance) and enforced in accordance with, and governed
by, the laws of the State of New York applicable to agreements made and to be
performed wholly within such jurisdiction. Any judicial proceeding brought
against any of the parties hereto with respect to this Agreement shall be
brought in the United States District Court for the Southern District of New
York sitting in New York County and any appellate court of that District Court
irrespective of where such party may be located at the time of such proceeding,
and by execution and delivery of this Agreement, each of the parties hereto
hereby consents to the exclusive jurisdiction of such court and waives any
defense or opposition to such jurisdiction.
Section 14.10. Arbitration. Any dispute referenced in subsection (b) of
Section 2.09 or in subsection (e) of Section 12.04 shall be resolved by binding
arbitration under the Commercial Arbitration Rules (the "AAA Rules") of the
American Arbitration Association (the "AAA"). This arbitration provision is
expressly made pursuant to and shall be governed by the Federal Arbitration
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Act, 9 U.S.C. Sections 1 -14. The parties hereto agree that, pursuant to Section
9 of the Federal Arbitration Act, a judgment of a United States District Court
of competent jurisdiction shall be entered upon the award made pursuant to the
arbitration. Three arbitrators, who shall have the authority to allocate the
costs of any arbitration initiated under this paragraph, shall be selected in
accordance with the following sentence within ten (10) days of the submission to
the AAA of the response to the statement of claim or the date on which any such
response is due, whichever is earlier. The selection shall be made as follows:
one by the Parent, one by the Acquiror and one by the two so selected, provided,
however, that only the third arbitrator shall be required to be neutral. The
arbitrators shall conduct the arbitration in accordance with the Federal Rules
of Evidence. The arbitrators shall decide the amount and extent of pre-hearing
discovery which is appropriate. The arbitrators shall have the power to enter
any award of monetary or injunctive relief (including the power to issue
permanent injunctive relief and also the power to reconsider any prior request
for immediate injunctive relief by either of the parties and any order as to
immediate injunctive relief previously granted or denied by a court in response
to a request therefor by either of the parties), including the power to render
an award as provided in Rule 43 of the AAA Rules; provided, however, that the
arbitrators shall not have the power to award punitive or consequential damages
under any circumstances (whether styled as punitive, exemplary, or treble
damages, or any penalty or punitive type of damages) regardless of whether such
damages may be available under applicable Law, the parties hereby waiving their
rights, if any, to recover any such damages, whether in arbitration or
litigation. Unless differently awarded by the arbitration tribunal, the fees and
expenses of the arbitrators shall be paid 50% by the Acquiror and 50% by the
Parent. The arbitration award may be enforced in any court having jurisdiction
over the parties and the subject matter of the arbitration. The arbitration
shall be held in New York, New York.
Section 14.11. Confidentiality Agreements. The Parent agrees that,
until the second anniversary of the Closing Date, it will not terminate, or
waive any provision of, any confidentiality agreement relating to information
regarding any of the Businesses entered into at any time during the period of
two years immediately preceding the date of this Agreement.
Section 14.12. Counterparts. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
PARENT
HALLIBURTON COMPANY
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------------------
Title: Senior Vice President of Halliburton
----------------------------------------
ACQUIROR
DEG ACQUISITIONS, LLC
By: /s/ XXXXXX X. XXXXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title: Manager
----------------------------------------
By: /s/ XXXX X. XXXXXXX
----------------------------------------
Name: Xxxx X. Xxxxxxx
----------------------------------------
Title: Manager
----------------------------------------
SELLER
DRESSER B.V.
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------------------
Title: Attorney-in-fact
----------------------------------------
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