1
================================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXXXXXXXX INTERNATIONAL, INC.,
SUBTECH ACQUISITION CORP.,
SUBTECH INTERNATIONAL, INC.
AND
THE STOCKHOLDERS AND PHANTOM STOCKHOLDER
OF
SUBTECH INTERNATIONAL, INC.
DATED AS OF FEBRUARY 3, 2000
================================================================================
2
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS..............................................................................................1
ARTICLE 2
THE MERGER...............................................................................................4
2.1 THE MERGER; EFFECTIVE TIME OF THE MERGER........................................................4
2.2 EFFECTS OF THE MERGER...........................................................................4
ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; SETTLEMENT
AND CANCELLATION OF PHANTOM STOCK RIGHTS.................................................................5
3.1 EFFECT ON CAPITAL STOCK.........................................................................5
3.2 MERGER CONSIDERATION............................................................................6
3.3 EXCHANGE OF SHARES..............................................................................6
3.4 SHARES OF DISSENTING STOCKHOLDERS...............................................................6
3.5 SETTLEMENT AND CANCELLATION OF PHANTOM STOCK RIGHTS.............................................7
3.6 THE CLOSING.....................................................................................7
3.7 ITEMS TO BE DELIVERED AT CLOSING................................................................7
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
THE MANAGEMENT STOCKHOLDERS REGARDING SUBTECH............................................................8
ARTICLE 5
INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS AND PHANTOM STOCKHOLDER.....................................................................8
5.1 AUTHORITY AND CAPACITY..........................................................................8
5.2 EXECUTION AND DELIVERY..........................................................................8
5.3 EFFECT OF AGREEMENT.............................................................................9
5.4 NO CONSENTS.....................................................................................9
5.5 SUBTECH STOCK AND PHANTOM STOCK RIGHTS..........................................................9
5.6 NO BROKERS......................................................................................9
5.7 INVESTMENT PURPOSE..............................................................................9
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF
WEI AND SUB.............................................................................................12
6.1 ORGANIZATION...................................................................................12
6.2 DUE AUTHORIZATION, EXECUTION AND DELIVERY; EFFECT OF AGREEMENT.................................13
-i-
3
6.3 NO CONSENTS....................................................................................13
6.4 BROKERAGE......................................................................................13
6.5 SEC DOCUMENTS..................................................................................14
6.6 OWNERSHIP OF SUBTECH COMMON STOCK..............................................................14
6.7 OWNERSHIP OF SUB...............................................................................14
6.8 CONTINUITY OF BUSINESS ENTERPRISE..............................................................14
ARTICLE 7
TERMINATION OF SUBTECH STOCKHOLDER AGREEMENT
AND PHANTOM STOCK AGREEMENT AND WRITTEN CONSENT.........................................................14
7.1 TERMINATION OF SUBTECH STOCKHOLDER AGREEMENT...................................................14
7.2 TERMINATION OF PHANTOM STOCK AGREEMENT.........................................................14
7.3 CONSENT OF STOCKHOLDERS TO MERGER..............................................................15
7.4 INDEMNIFICATION UNDER THE SUBTECH EXCHANGE AGREEMENT...........................................15
ARTICLE 8
CONDITIONS TO WEI'S OBLIGATIONS.........................................................................15
8.1 REPRESENTATIONS TRUE AND CORRECT...............................................................15
8.2 PERFORMANCE OF COVENANTS.......................................................................15
8.3 RESOLUTIONS....................................................................................15
8.4 GOVERNMENTAL APPROVALS.........................................................................15
8.5 FURTHER ACTION.................................................................................15
8.6 NO BANKRUPTCY..................................................................................16
8.7 NO MATERIAL ADVERSE CHANGE.....................................................................16
8.8 LEGAL OPINION..................................................................................16
ARTICLE 9
CONDITIONS TO THE STOCKHOLDERS AND
PHANTOM STOCKHOLDERS OBLIGATIONS.......................................................................16
9.1 REPRESENTATIONS TRUE AND CORRECT...............................................................16
9.2 PERFORMANCE OF COVENANTS.......................................................................16
9.3 RESOLUTIONS....................................................................................16
9.4 GOVERNMENTAL APPROVALS.........................................................................16
9.5 NO MATERIAL ADVERSE CHANGE.....................................................................17
ARTICLE 10
INDEMNIFICATION.........................................................................................17
10.1 INDEMNIFICATION BY THE STOCKHOLDERS AND PHANTOM STOCKHOLDERS..................................17
10.2 INDEMNIFICATION BY WEI.........................................................................17
10.3 NOTICE AND OPPORTUNITY TO DEFEND...............................................................17
10.4 EXPRESS NEGLIGENCE.............................................................................18
10.5 RELEASES.......................................................................................19
10.6 INDEMNIFICATION LIMITATIONS....................................................................20
ARTICLE 11
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS..............................................................20
-ii-
4
ARTICLE 12
REGISTRATION RIGHTS.....................................................................................20
12.1 REGISTRATION RIGHTS............................................................................20
12.2 PROCEDURE......................................................................................21
12.3 INDEMNIFICATION................................................................................23
12.4 TERMINATION....................................................................................24
ARTICLE 13
MISCELLANEOUS...........................................................................................24
13.1 ENTIRE AGREEMENT...............................................................................24
13.2 SUCCESSORS AND ASSIGNS.........................................................................24
13.3 ARBITRATION....................................................................................25
13.4 EXPENSES.......................................................................................26
13.5 EFFECT OF DUE DILIGENCE........................................................................26
13.6 TAKING OF NECESSARY ACTION.....................................................................26
13.7 INVALIDITY.....................................................................................26
13.8 COUNTERPARTS...................................................................................27
13.9 HEADINGS.......................................................................................27
13.10 CONSTRUCTION AND REFERENCES....................................................................27
13.11 MODIFICATION AND WAIVER........................................................................27
13.12 NOTICES........................................................................................27
13.13 PUBLIC ANNOUNCEMENTS...........................................................................28
13.14 GOVERNING LAW; INTERPRETATION..................................................................28
13.15 INCORPORATION BY REFERENCE.....................................................................28
-iii-
5
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") dated as of
February 3, 2000, is entered into by and among Xxxxxxxxxxx International, Inc.,
a Delaware corporation ("WEI"), SubTech Acquisition Corp., a Delaware
corporation ("Sub"), SubTech International, Inc., a Delaware corporation
("SubTech"), the stockholders of SubTech signatory hereto (such individuals and
entities other than WEI, the "Stockholders") and the holder of phantom stock
rights of SubTech signatory hereto (the "Phantom Stockholder").
W I T N E S S E T H:
WHEREAS, WEI currently owns 51% of the issued and outstanding capital
stock of SubTech; and
WHEREAS, WEI desires to acquire the remaining issued and outstanding
shares of capital stock of SubTech from the other stockholders of SubTech and to
settle and retire the outstanding Phantom Stock Rights owned by the Phantom
Stockholder; and
WHEREAS, the parties desire to effect the acquisition such that at the
Effective Time, Sub will merge with and into SubTech and the Stockholders will
exchange their SubTech Common Stock solely for WEI Common Stock, all of which is
intended to qualify as a tax-free reorganization pursuant to Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the parties desire to set forth herein certain
representations, warranties and agreements in connection with the acquisition.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions hereinafter set forth, the parties do hereby agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings given
to them in this Article 1, unless defined elsewhere in this Agreement.
1.1 "AFFILIATE" shall mean with respect to any Person, an individual or
entity that, directly or indirectly, controls, is controlled by or is under
common control with such Person; provided, however, for purposes of this
Agreement SubTech shall not be deemed an Affiliate of WEI.
6
1.2 "BUSINESS DAY" shall mean any day other than Saturday, Sunday or
other day on which federally chartered commercial banks in Houston, Texas are
authorized by law to close.
1.3 "CERTIFICATE OF MERGER" shall have the meaning such term is given
in Section 2.1 hereof.
1.4 "CLOSING" shall have the meaning such term is given in Section 3.6
hereof.
1.5 "CLOSING DATE" shall have the meaning such term is given in Section
3.6 hereof.
1.6 "CODE" shall have the meaning such term is given in the recitals.
1.7 "COMMISSION" means the Securities and Exchange Commission.
1.8 "CONSTITUENT CORPORATION" shall have the meaning such term is given
in Section 2.2 hereof.
1.9 "DAMAGES" shall mean any and all liabilities, losses, damages,
demands, assessments, claims, costs, expenses, awards, judgments, penalties,
settlements, fines, costs of remediation, diminutions in value, including
interest on any of the foregoing, and the costs and expenses incurred in
connection with investigating and defending any claims or causes of action,
including, without limitation, attorneys' fees and expenses and all fees and
expenses of consultants and other professionals.
1.10 "EFFECTIVE TIME" shall have the meaning such term is given in
Section 2.1 hereof.
1.11 "ENCUMBRANCE" shall mean any security interest, mortgage, pledge,
claim, lien, charge, option, defect, restriction, right of first refusal,
easement, license, lease, title defect or imperfection, encumbrance or other
right or interest of any third person of any nature whatsoever.
1.12 "GOVERNMENTAL BODY" shall mean any federal, state, local,
municipal, foreign or other governmental or quasi-governmental body or
authority, including any court, administrative agency or other person or entity
thereunder.
1.13 "INCOME TAX REGULATIONS" shall mean the Income Tax Regulations,
including Temporary Regulations, promulgated under the Code, as such regulations
may be amended, modified or supplemented from time to time (including
corresponding provisions of succeeding regulations).
1.14 "INDEMNIFYING PARTY" shall be as defined in Section 10.4 hereof.
1.15 "INDEMNITEE" shall be as defined in Section 10.4 hereof.
1.16 "LEGAL REQUIREMENT" shall mean any federal, state, or local law
(including environmental law), ordinance, principle of common law, rule,
regulation or statute, United States or foreign or state, local or otherwise.
-2-
7
1.17 "MANAGEMENT STOCKHOLDERS" means Xxxxxxxx Estate Ltd., Xxxx
Xxxxxxxxx, Xxxxx X. Xxxxxx XXX, Xxxxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxx X. Xxxxx.
1.18 "MATERIAL ADVERSE EFFECT" with respect to a party shall mean a
single event, occurrence or fact that, together with all other events,
occurrences and facts that could reasonably be expected to result in a loss to
that party (and all of its subsidiaries taken as a whole) would have, or might
reasonably be expected to have, a material adverse effect on the assets,
business, operations or financial condition of that party (and all of its
subsidiaries taken as a whole), or that would constitute a criminal violation of
law involving a felony.
1.19 "ORDER" means any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency or Governmental Body.
1.20 "PERSON" shall mean any individual, corporation, limited liability
company, association, partnership, joint venture, trust or unincorporated
organization or government or any agent or political subdivision thereof.
1.21 "PHANTOM STOCK AGREEMENT" means that certain letter dated February
5, 1999, from SubTech to the Phantom Stockholder, providing for SubTech to
employ the Phantom Stockholder and stating certain compensation arrangements
based on the value of certain phantom stock rights as stated in said letter.
1.22 "PHANTOM STOCK RIGHTS" means the rights of the Phantom Stockholder
to certain compensation based on certain SubTech "phantom stock" provisions
under the Phantom Stock Agreement.
1.23 "SEC DOCUMENTS" shall mean WEI's (a) Annual Report on Form 10-K
for the year ended December 31, 1998, (b) proxy statement with respect to the
Annual Meeting of Stockholders held on May 6, 1999, (c) Quarterly Reports on
Form 10-Q for the quarterly periods ended March 31, 1999, June 30, 1999 and
September 30, 1999, and (d) Current Reports on Form 8-K dated April 29, 1999,
May 21, 1999, July 21, 1999, August 16, 1999, August 31, 1999, September 15,
1999, October 22, 1999, November 12, 1999 and January 31, 2000.
1.24 "SECURITIES ACT" means the Securities Act of 1933, as amended.
1.25 "STOCKHOLDERS REPRESENTATIVE" shall mean Xxxx X. Xxxxxxxx.
1.26 "SUBTECH COMMON STOCK" shall have the meaning such term is given
in Section 3.1 hereof.
1.27 "SUBTECH EXCHANGE AGREEMENT" means that certain Formation and
Exchange Agreement dated November 4, 1998, by and among WEUS Holding, Inc., the
shareholders of BEI Technology, Inc., DataLine Petroleum Services, Inc. and
Subsurface Technology, A/S, and SubTech.
-3-
8
1.28 "SUBTECH STOCKHOLDERS AGREEMENT" means that certain Stockholders
Agreement dated November 4, 1998, among WEI, WEUS Holding, Inc., SubTech, the
Stockholders and Xxxxx Xxxxxx.
1.29 "SURVIVING CORPORATION" shall have the meaning such term is given
in Section 2.2 hereof.
1.30 "WEI COMMON STOCK" means the common stock, $1.00 par value, of
WEI.
1.31 "WEI SHARES" shall mean the shares of WEI Common Stock issued
pursuant to Sections 3.2 and 3.5.
1.32 "WEI STOCK PRICE" shall mean the average closing sales price for
the WEI Common Stock for the 20 trading days ending on the third Business Day
immediately preceding the Closing Date, as reported on the New York Stock
Exchange or other principal securities exchange on which the WEI Common Stock is
then traded, or, as quoted on the Nasdaq, or if not listed on the Nasdaq, as
reported on the NASD OTC Bulletin Board or in the Daily Quotation Sheets, as
applicable.
ARTICLE 2
THE MERGER
2.1 THE MERGER; EFFECTIVE TIME OF THE MERGER. Upon the terms and
conditions of this Agreement and in accordance with Delaware law, Sub shall be
merged with and into SubTech (the "Merger") at the Effective Time. The Merger
shall become effective immediately when a certificate of merger (the
"Certificate of Merger"), prepared and executed in accordance with the relevant
laws of Delaware, is filed with the Secretary of State of the State of Delaware
or, if agreed to by the parties, at such time thereafter as is provided in the
Certificate of Merger (the "Effective Time"). The filing of the Certificate of
Merger shall be made as soon as practicable on or after the Closing.
2.2 EFFECTS OF THE MERGER.
(a) At the Effective Time: (i) Sub shall be merged with and
into SubTech, the separate existence of Sub shall cease and SubTech shall
continue as the surviving corporation (Sub and SubTech are sometimes referred to
herein as the "Constituent Corporations" and SubTech is sometimes referred to
herein as the "Surviving Corporation"); (ii) the Certificate of Incorporation of
SubTech as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation; and (iii) the Bylaws
of SubTech as in effect immediately prior to the Effective Time shall be the
Bylaws of the Surviving Corporation.
(b) The directors and officers of Sub at the Effective Time
shall, from and after the Effective Time, be the directors and officers of the
Surviving Corporation and shall serve until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws.
-4-
9
(c) At and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises of a public as
well as of a private nature, and be subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations; and all and
singular rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, and all debts due to
either of the Constituent Corporations on whatever account, as well as for stock
subscriptions and all other things in action or belonging to each of the
Constituent Corporations, shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Constituent Corporations; and the title to any
real estate vested by deed or otherwise, in either of the Constituent
Corporations, shall not revert or be in any way impaired; but all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired; and all debts, liabilities and
duties of the Constituent Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as if said debts
and liabilities had been incurred by it.
ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; SETTLEMENT
AND CANCELLATION OF PHANTOM STOCK RIGHTS
3.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of common
stock, $.01 par value, of SubTech ("SubTech Common Stock") or capital stock of
Sub:
(a) Conversion of Sub Capital Stock. Each issued and
outstanding share of capital stock of Sub shall be converted into and become one
fully paid and nonassessable share of Common Stock of the Surviving Corporation.
(b) SubTech Shares owned by WEI and Cancellation of Treasury
Stock. Each share of SubTech Common Stock owned by WEI shall remain outstanding
and all shares of capital stock of SubTech that are owned by SubTech as treasury
stock shall be canceled and retired and shall cease to exist and no stock of WEI
or other consideration shall be delivered or deliverable in exchange therefor.
(c) Conversion of SubTech Common Stock. Subject to the
provisions of Section 3.1(d), each share of SubTech Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares to remain
outstanding or be canceled in accordance with Section 3.1(b)) shall be converted
into the right to receive the Merger Consideration as set forth in Section 3.2.
(d) Cancellation of SubTech Common Stock. All shares of
SubTech Common Stock (other than shares to remain outstanding or be canceled in
accordance with Section 3.1(b)), when converted as provided in Section 3.1(c),
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of any such shares shall cease to
-5-
10
have any rights with respect thereto, except the right to receive the Merger
Consideration in accordance with Section 3.3, without interest.
3.2 MERGER CONSIDERATION. "Merger Consideration" shall mean, with
respect to each record holder of shares of SubTech Common Stock (other than
WEI), that number of shares of WEI Common Stock calculated by utilizing the
formula set forth immediately below:
Number of shares of Number of shares of
WEI Common Stock SubTech Common
to be issued = Stock owned of Record x $10.00
--------------------------------------------------
WEI Stock Price
No fractional shares of WEI Common Stock shall be issued; rather, the number of
shares of WEI Common Stock issuable shall be rounded up to the nearest whole
number of shares of WEI Common Stock.
3.3 EXCHANGE OF SHARES. At the Effective Time, by virtue of the Merger
and without any action on the part of the holders of any shares of SubTech
Common Stock:
(a) Exchange Procedure. Each record holder of shares of
SubTech Common Stock (other than WEI) shall be entitled to receive in exchange
therefor the Merger Consideration that such holder has the right to receive
pursuant to the provisions of Sections 3.1 and 3.2, and the shares so
surrendered shall forthwith be canceled on SubTech's stock records.
(b) No Further Ownership Rights in SubTech Common Stock. The
Merger Consideration to be issued upon the surrender for exchange of shares of
SubTech Common Stock in accordance with the terms hereof shall be deemed to have
been issued, paid or delivered in full satisfaction of all rights pertaining to
such shares of SubTech Common Stock, and after the Effective Time there shall be
no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of SubTech Common Stock held by the record
holders of shares of SubTech Common Stock (other than WEI) that were outstanding
immediately prior to the Effective Time.
(c) No Liability. Neither WEI nor SubTech shall be liable to
any holder of shares of SubTech Common Stock for any cash amounts to the extent
such amount is delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. Any amounts remaining unclaimed by
holders of any such shares two years after the Effective Time (or such earlier
date immediately prior to the time at which such amounts would otherwise escheat
to or become property of any Governmental Body) shall, to the extent permitted
by applicable law, become the property of WEI free and clear of any claims or
interest of any such holders or their successors, assigns or personal
representatives previously entitled thereto.
3.4 SHARES OF DISSENTING STOCKHOLDERS. Each Stockholder hereby waives
any and all rights to dissent or appraisal with respect to the Merger.
-6-
11
3.5 SETTLEMENT AND CANCELLATION OF PHANTOM STOCK RIGHTS.
(a) In consideration for the payments set forth in Subsections
3.5(b) and (c) below, the Phantom Stockholder hereby settles, relinquishes and
cancels his Phantom Stock Rights.
(b) As consideration for the settlement and cancellation of
the Phantom Stock Rights, WEI shall issue to the Phantom Stockholder at the
Effective Time the number of shares of WEI Common Stock determined by dividing
$75,000 by the WEI Stock Price.
(c) As additional consideration for the settlement and
cancellation of the Phantom Stock Rights, each Stockholder agrees to assign to
the Phantom Stockholder 1.720% of the number of WEI Shares received by such
stockholder pursuant to the terms of this Agreement. The Stockholders shall
execute stock assignments effective at the Effective Time to assign such shares
to the Phantom Stockholder, and WEI shall issue a certificate for such shares to
the Phantom Stockholder at the Effective Time, and the number of WEI Shares to
be issued under stock certificates to each Stockholder at the Effective Time
shall be reduced by the portion assigned to the Phantom Stockholder.
(d) No fractional shares of WEI Common Stock shall be issued
or assigned to the Phantom Stockholder; rather, the number of shares of WEI
Common Stock issued or assignable pursuant to the terms of Subsections 3.5(b)
and (c) above shall be rounded up to the nearest whole number of shares of WEI
Common Stock.
3.6 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of WEI, 000 Xxxx Xxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx, at 9:00 a.m. (local time) on the fifth
business day following the date after the later to occur of (a) the obtaining of
the last requisite regulatory approval and (b) the receipt of all other
approvals, authorizations and consents required and (c) the satisfaction or
waiver of all conditions to the obligations of the parties to consummate the
transactions contemplated hereby, or at such other time and place as parties
hereto may mutually agree (the "Closing Date"). All matters at the Closing shall
be considered to take place simultaneously and no delivery of any document shall
be deemed complete until all transactions and deliveries of documents are
completed. The parties hereto agree to promptly advise the other parties in
writing upon the occurrence of the events described in clauses (a), (b) and (c)
above. The Closing shall not occur later than February 15, 2000, unless the
parties shall agree to some later date.
3.7 ITEMS TO BE DELIVERED AT CLOSING.
(a) At the Closing, the Stockholders and Phantom Stockholder
shall deliver to WEI the following:
(i) Opinion of counsel in a form reasonably
satisfactory to WEI with respect to the transactions described
in Section 3.5(c);
(ii) Stock Powers transferring shares of SubTech
Common Stock;
-7-
12
(iii) Such other documents, instruments and
conveyances as may reasonably be necessary to effectuate the
transfer of the SubTech Common Stock to WEI and the
cancellation of the Phantom Stock Rights.
(b) At the Closing, WEI shall deliver to the Stockholders and
Phantom Stockholder, the following:
(i) Certificates representing the WEI Shares;
(ii) Such other documents and instruments as may
reasonably be necessary to effectuate the issuance of the WEI
Shares to the Stockholders and Phantom Stockholder.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
THE MANAGEMENT STOCKHOLDERS REGARDING SUBTECH
For purposes of this Article 4, each Management Stockholder, severally,
and not jointly, represents and warrants to WEI that such Management Stockholder
has not taken or caused to be taken any action required by applicable law, the
Certificate of Incorporation or Bylaws of SubTech or an agreement among the
Management Stockholders and SubTech or WEI to be consented to by the
stockholders or the Board of Directors of SubTech without first obtaining the
requisite consents or having obtained ratification of such action after any such
action was taken.
ARTICLE 5
INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS AND PHANTOM STOCKHOLDER
Each Stockholder and Phantom Stockholder, severally and not jointly, as
to himself, herself or itself and not as to any other Stockholder or Phantom
Stockholder, represents and warrants to the other parties as follows:
5.1 AUTHORITY AND CAPACITY. Such Stockholder or Phantom Stockholder has
the requisite legal capacity and full power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
5.2 EXECUTION AND DELIVERY. Such Stockholder or Phantom Stockholder has
duly executed and delivered this Agreement. This Agreement constitutes a legal,
valid and binding obligation of such Stockholder or Phantom Stockholder,
enforceable against such Stockholder or Phantom Stockholder in accordance with
its terms, except to the extent that such enforceability (i) may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally and (ii) is subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
-8-
13
5.3 EFFECT OF AGREEMENT. The execution, delivery and performance by
such Stockholder or Phantom Stockholder of this Agreement and the consummation
of the transactions contemplated hereby will not, with or without the giving of
notice or the lapse of time, or both, (i) violate any Order or Legal Requirement
applicable to or binding upon such Stockholder or Phantom Stockholder; (ii)
violate any provision of any indenture, instrument creating any lien, lease,
agreement or instrument to which such Stockholder or Phantom Stockholder is a
party or by which such Stockholder or Phantom Stockholder is bound or (iii)
conflict with, or result in a breach or default under, the constituent documents
of such Stockholder or Phantom Stockholder to the extent such Stockholder or
Phantom Stockholder is not a natural person; except, in each case, for
violations, conflicts, breaches, defaults, terminations or modifications which
in the aggregate would not materially hinder or impair the consummation of the
transactions contemplated by this Agreement.
5.4 NO CONSENTS. There are no consents, approvals or authorizations of,
or exemptions by, or filings with, any Governmental Body or any Person required
for the Stockholder or Phantom Stockholder in connection with the execution,
delivery of or performance by such Stockholder or Phantom Stockholder of this
Agreement and the consummation of the transactions contemplated hereby, which
have not been obtained.
5.5 SUBTECH STOCK AND PHANTOM STOCK RIGHTS. Such Stockholder owns
(beneficially and of record) (except for Xxxxx X. Xxxxxx, who is the beneficial
owner of his SubTech Common Stock, and for which Xxxxx X. Xxxxxx, XXX is the
record owner thereof, in each case free and clear of all Encumbrances) the
shares of SubTech Common Stock as set forth opposite his or its name on Schedule
5.5 hereto free and clear of all Encumbrances and, upon consummation of the
Merger, such shares will be delivered to WEI free and clear of all Encumbrances.
Such Phantom Stockholder owns all right, title and interest in the Phantom Stock
Rights free and clear of all Encumbrances.
5.6 NO BROKERS. Such Stockholder or Phantom Stockholder has not
employed or retained any investment banker, broker, agent, finder or any other
party, or incurred any obligation for broker's fees, finder's fees or
commissions, with respect to the sale of the outstanding capital stock of
SubTech or Phantom Stock Rights or with respect to the transactions contemplated
by this Agreement, or otherwise dealt with anyone purporting to act in the
capacity of a finder or broker with respect thereto whereby SubTech or any other
party to this Agreement may be obligated to pay such a fee or commission. Such
Stockholder or Phantom Stockholder agrees to indemnify and hold WEI and the
other parties hereto harmless from and against any and all claims, liabilities
or obligations with respect to any fees, commissions or expenses asserted by any
Person on the basis of any act, statement, agreement or commitment alleged to
have been made by such Stockholder or Phantom Stockholder with respect to any
such fee, expense or commission.
5.7 INVESTMENT PURPOSE.
(a) Such Stockholder or Phantom Stockholder recognizes and
understands that the WEI Shares (collectively, the "Securities") will not,
except as expressly provided in Article 12 hereof, be registered under the
Securities Act or the securities laws of any state (the "Securities Laws"). The
Securities are not being so registered in reliance upon exemptions from the
Securities Laws that are predicated, in part, on the representations, warranties
and agreements of such Stockholder or Phantom Stockholder contained herein.
-9-
14
(b) Such Stockholder or Phantom Stockholder represents and
warrants that (i) such Stockholder or Phantom Stockholder either is an
"accredited investor" within the meaning of Regulation D promulgated by the
Commission pursuant to the Securities Act and is not relying on a financial
advisor in connection with his or its participation in the transactions
contemplated hereby, or is not an accredited investor and the Stockholders
Representative is such Stockholder's or Phantom Stockholder's "purchaser
representative" within the meaning of Regulation D promulgated by the Commission
pursuant to the Securities Act in connection with evaluating the merits and
risks of this Agreement, the transactions contemplated hereby and an investment
in the Securities and the suitability thereof as an investment therefor, (ii)
such Stockholder or Phantom Stockholder, individually or together with the
Stockholders Representative, has such knowledge and experience in financial,
investment and business matters, such experience being based on actual
participation therein, that such Stockholder or Phantom Stockholder,
individually or together with the Stockholders Representative, is capable of
evaluating the merits and risks of this Agreement, the transactions contemplated
hereby and an investment in the Securities and the suitability thereof as an
investment therefor, (iii) the Securities will be acquired for such
Stockholder's or Phantom Stockholder's own account solely for investment and not
with a view toward resale or redistribution in violation of the Securities Laws,
(iv) such Stockholder or Phantom Stockholder, individually or together with the
Stockholders Representative, has reviewed such Stockholder's or Phantom
Stockholder's financial condition and commitments, and such Stockholder or
Phantom Stockholder, individually or together with the Stockholders
Representative, is satisfied that such Stockholder or Phantom Stockholder has
adequate means and providing for such Stockholder's or Phantom Stockholder's
financial needs and possible contingencies, has no present or existing or
contemplated future need to dispose of all or any portion of such Stockholder's
or Phantom Stockholder's interest in the Securities to satisfy any existing or
contemplated undertaking, need or indebtedness, and has assets or sources of
income that, taken together, are more than sufficient so that such Stockholder
or Phantom Stockholder can bear the risk of the loss of his or its entire
investment in the Securities, (v) such Stockholder or Phantom Stockholder has no
plan or intention to sell, exchange or otherwise dispose of his or its interest
in the Securities, (vi) such Stockholder or Phantom Stockholder is a natural
person whose residence and domicile are set forth on Annex A hereto or an entity
as described on Annex A hereto and (vii) in connection with the transactions
contemplated hereby, no assurances have been made concerning the future results
of WEI or as to the value of the Securities. Such Stockholder or Phantom
Stockholder understands that such Stockholder or Phantom Stockholder must bear
the economic risks of such Stockholder's or Phantom Stockholder's investment in
the Securities for an indefinite period of time. If such Stockholder or Phantom
Stockholder is relying upon the Stockholders Representative in such connection,
the Stockholders Representative has disclosed to such Stockholder or Phantom
Stockholder any material relationship between himself and his Affiliates and
SubTech, WEI or any of their respective Affiliates during the past two years or
currently contemplated and any compensation received or to be received as a
result of such relationship. Such Stockholder or Phantom Stockholder understands
that WEI is not under any obligation to file a registration statement or to take
any other action under the Securities Laws with respect to any Securities except
as expressly set forth in Article 12 hereof.
(c) Such Stockholder or Phantom Stockholder has consulted with
such Stockholder's or Phantom Stockholder's own counsel in regard to the
Securities Laws and has had the opportunity to hire his, her or its own legal
counsel other than Chamberlain, Hrdlicka, White, Xxxxxxxx and Xxxxxx and is
fully aware (i) of the circumstances under which such Stockholder or
-10-
15
Phantom Stockholder is required to hold the Securities, (ii) of the limitations
on the transfer or disposition of the Securities, (iii) that the Securities must
be held indefinitely unless the transfer thereof is registered under the
Securities Laws or an exemption from registration is available and (iv) that no
exemption from registration is likely to become available for at least one year
from the date of acquisition of the Securities. Such Stockholder or Phantom
Stockholder has been advised by such Stockholder's or Phantom Stockholder's
counsel as to the provisions of Rules 144 and 145 as promulgated by the
Commission under the Securities Act and has been advised of the applicable
limitations thereof. Such Stockholder or Phantom Stockholder acknowledges that
WEI is relying upon the truth and accuracy of the representations and warranties
in this Article 5 by such Stockholder or Phantom Stockholder in consummating the
transactions contemplated by this Agreement without registering the Securities
under the Securities Laws.
(d) WEI has furnished such Stockholders' or Phantom
Stockholders' legal counsel with the SEC Documents, a summary description of the
terms of the WEI Common Stock and a summary description of any material written
information concerning the transactions contemplated hereby that has been
provided to such Stockholder and Phantom Stockholder that is an "accredited
investor" but has not been provided to the other Stockholders or Phantom
Stockholders. Such Stockholders' or Phantom Stockholders' legal counsel has
provided such Stockholder and Phantom Stockholder and the Stockholders
Representative with the SEC Documents and such summary descriptions. Such
Stockholder and Phantom Stockholder and the Stockholders Representative have
reviewed copies of the SEC Documents and such summary descriptions and have
attended one or more meetings at which representatives of WEI and counsel to WEI
and to such Stockholder or Phantom Stockholder have made presentations
concerning this Agreement and the transactions contemplated hereby (all such
written materials, including this Agreement and the Exhibits, Annexes and
Schedules hereto, and such presentations are hereinafter referred to as the
"Disclosure Information") and no person has made any representations or
warranties of any kind or nature to induce such Stockholder or Phantom
Stockholder to enter into this Agreement except as set forth in the written
Disclosure Information. WEI has made available to such Stockholder or Phantom
Stockholder and the Stockholders Representative the opportunity to ask questions
of, and receive answers from, its representatives concerning the terms and
conditions of the transactions contemplated by this Agreement and to obtain any
additional information that they possess or could reasonably acquire for the
purpose of verifying the accuracy of information furnished to such Stockholder's
or Phantom Stockholder's legal counsel and the Stockholders Representative as
set forth herein or for the purpose of considering the transactions contemplated
hereby. WEI has offered to make available to such Stockholder or Phantom
Stockholder and the Stockholders Representative upon request at any time all
exhibits filed by WEI with the Commission as part of any of the reports filed
therewith.
(e) Such Stockholder or Phantom Stockholder and the
Stockholders Representative have made an independent investigation of the
pertinent facts relating to the transactions contemplated hereby, have reviewed
carefully the terms of this Agreement and the information furnished to such
Stockholder or Phantom Stockholder and the Stockholders Representative
(including the Disclosure Information) to the extent each such Person deems
necessary to be fully informed with respect thereto and understand the nature of
an investment in the WEI Shares.
-11-
16
(f) Such Stockholder or Phantom Stockholder agrees that the
certificates representing the Securities will be imprinted with the following
legend, the terms of which are specifically agreed to:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, OR THE SECURITIES LAWS OF ANY STATE, IN RELIANCE UPON EXEMPTIONS
FROM REGISTRATION REQUIREMENTS. SUCH SHARES MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT UPON REGISTRATION OR
DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH
SALE, PLEDGE, HYPOTHECATION OR TRANSFER OR THE SUBMISSION TO THE
COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY TO
THE EFFECT THAT SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER SHALL NOT
BE IN VIOLATION OF THE SECURITIES ACT OF 1933 OR APPLICABLE STATE
SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.
Such Stockholder or Phantom Stockholder understands and agrees that appropriate
stop transfer notations will be placed in the records of WEI and with its
transfer agents in respect of the Securities that are to be issued to such
Stockholder or Phantom Stockholder. WEI agrees that any Securities sold pursuant
to an effective registration statement, including a registration statement filed
pursuant to Article 12 hereof, shall have the above legend removed to permit the
closing of the sale within three Business Days of written notice of the sale and
certification by such selling Stockholder or Phantom Stockholder that the sale
was made pursuant to the plan of distribution described in the registration
statement and the prospectus delivery requirements under the Securities Laws
were fully complied with in connection with the sale.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF
WEI AND SUB
WEI and Sub hereby represent and warrant to the Stockholders and
Phantom Stockholder as follows:
6.1 ORGANIZATION. Each of WEI and Sub is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has all
requisite corporate power and authority to carry on its business as it is now
being conducted, and to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby.
-12-
17
6.2 DUE AUTHORIZATION, EXECUTION AND DELIVERY; EFFECT OF AGREEMENT.
(a) The execution, delivery and performance by each of Sub and
WEI of this Agreement and the consummation by WEI and Sub of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of WEI and Sub. This Agreement
has been duly and validly executed and delivered by WEI and Sub and
constitutes the legal, valid and binding obligation of WEI and Sub,
enforceable against each in accordance with its terms, except to the
extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to creditors' rights generally and (ii) is subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(b) The execution, delivery and performance by each of Sub and
WEI of this Agreement and the consummation by WEI and Sub of the
transactions contemplated hereby will not, with or without the giving
of notice or the lapse of time, or both, (i) violate any provision of
any law, rule or regulation to which WEI and Sub is subject; (ii)
violate any Order or Legal Requirement applicable to or binding upon
the WEI and Sub; (iii) conflict with, or result in a breach or default
under, the certificate of incorporation or by-laws of WEI and Sub;
except, in each case, for violations, conflicts, breaches, defaults,
terminations or modifications which in the aggregate would not
materially hinder or impair the consummation of the transactions
contemplated by this Agreement.
(c) WEI has taken all necessary corporate action to permit it
to issue the Securities pursuant to the terms of this Agreement.
Subject to the provisions of Articles 2 and 3, the Securities issued
pursuant to the terms of this Agreement, will, when issued, be validly
issued, fully paid and non-assessable and not subject to any
Encumbrances (other than those Encumbrances created or suffered by the
Stockholders or the Phantom Stockholder and their respective Affiliates
and restrictions on sales of the WEI Shares under applicable Securities
Laws). The Securities when issued pursuant to this Agreement, will,
when issued, be listed on the New York Stock Exchange, subject to
official notice of issuance.
6.3 NO CONSENTS. There are no consents, approvals or authorizations of,
or exemptions by, or filings with, any Governmental Body or any Person required
for WEI or Sub in connection with the execution, delivery or performance by WEI
and Sub of this Agreement and the consummation of the transaction contemplated
hereby that have not been obtained.
6.4 BROKERAGE. No banker, broker, finder or other Person is entitled to
any brokerage or finder's fee or other commission in respect of this Agreement
or the transactions contemplated hereby based in any way on agreements,
arrangements or understandings made by or on behalf of WEI or any Affiliate of
WEI. WEI agrees to indemnify and hold the Stockholders harmless from and against
any and all claims, liabilities or obligations with respect to any fees,
commissions or expenses asserted by any Person on the basis of any act,
statement, agreement or commitment alleged to have been made by WEI or any
Affiliate of WEI with respect to any such fee, expense or commission.
-13-
18
6.5 SEC DOCUMENTS. WEI has delivered to the Stockholders' and Phantom
Stockholder's legal counsel all of the SEC Documents. The SEC Documents
represent each report filed by WEI with the Commission since March 30, 1999. As
of their respective dates, the SEC Documents (i) were prepared in all material
respects in accordance with the applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
applicable to such documents and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading except for such statements, if any,
as have been modified by subsequent filing with the Commission prior to the date
hereof. The consolidated financial statements of WEI included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles (except as may be indicated in the notes thereto)
and fairly present the consolidated financial position of WEI and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended. Since September
30, 1999, other than as discussed in the SEC Documents, there has been no
material adverse change in the business of WEI and its subsidiaries, taken as a
whole.
6.6 OWNERSHIP OF SUBTECH COMMON STOCK. As of the Effective Time, WEI
owns at least 51% of the SubTech Common Stock and no Affiliate of WEI owns any
SubTech Common Stock.
6.7 OWNERSHIP OF SUB. As of the Effective Time, WEI owns 100% of the
Common Stock of Sub, as a wholly owned subsidiary formed for the specific
purpose of consummating the Merger.
6.8 CONTINUITY OF BUSINESS ENTERPRISE. As of the Effective Time, it is
the intention of WEI to continue at least one significant historic business line
of SubTech, or to use at least a significant portion of SubTech's historic
business assets in a business, in each case within the meaning of Section
1.368-1(d) of the Income Tax Regulations.
ARTICLE 7
TERMINATION OF SUBTECH STOCKHOLDER AGREEMENT
AND PHANTOM STOCK AGREEMENT AND WRITTEN CONSENT
7.1 TERMINATION OF SUBTECH STOCKHOLDER AGREEMENT. The parties hereto
agree that the SubTech Stockholders Agreement is hereby terminated on the
Closing Date in all respects and each of the parties thereto are hereby released
from any and all obligations thereunder as of the Closing Date.
7.2 TERMINATION OF PHANTOM STOCK AGREEMENT. WEI and the Phantom
Stockholder agree that the Phantom Stock Agreement is hereby terminated in all
respects as of the Closing Date and each of the parties thereto are hereby
released from any and all obligations thereunder as of the Closing Date.
-14-
19
7.3 CONSENT OF STOCKHOLDERS TO MERGER. Each of the parties hereto
acknowledge, and represent, warrant and agree, that such party's execution and
delivery of this Agreement constitutes their written consent, pursuant to
Section 228(a) of the General Corporation Law of the State of Delaware (for all
shares of SubTech Common Stock for which they are the record owner) approving
the Merger, this Agreement and all of the transactions contemplated by this
Agreement.
7.4 INDEMNIFICATION UNDER THE SUBTECH EXCHANGE AGREEMENT. The parties
hereto acknowledge and agree that Section 10.7 of the SubTech Exchange Agreement
sets forth the priority and order in which an indemnified party is entitled to
receive cash or Newco Shares (as defined in the SubTech Exchange Agreement) in
satisfaction of their claims. The parties hereto represent, warrant, covenant
and agree that the term "Newco Shares" for purposes of Article 10 of the SubTech
Exchange Agreement shall mean the Securities issued pursuant to this Agreement
and the amount of any proceeds or other consideration received from the sale or
transfer of such Securities.
ARTICLE 8
CONDITIONS TO WEI'S OBLIGATIONS
The obligations of WEI and Sub to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver
by WEI) on or prior to the Closing Date of all of the following conditions:
8.1 REPRESENTATIONS TRUE AND CORRECT. The representations of the
Stockholders and Phantom Stockholder set forth in this Agreement shall be true
and correct at and as of the Closing Date.
8.2 PERFORMANCE OF COVENANTS. The Stockholders and Phantom Stockholders
shall have performed and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed by or
complied with by them prior to or at the Closing.
8.3 RESOLUTIONS. Each Stockholder that is not an individual Stockholder
shall have delivered certified copies of resolutions of such Stockholder
approving the Agreement and the transactions contemplated hereby.
8.4 GOVERNMENTAL APPROVALS. No statute, rule or regulation or order of
any court or administrative agency shall be in effect which prohibits WEI or Sub
from consummating the transactions contemplated hereby and no suit, action,
investigation or other proceeding shall have been instituted or threatened
(other than by WEI or any Affiliate thereof) seeking to restrain or prohibit WEI
or Sub or the Stockholders or Phantom Stockholder from consummating the
transactions contemplated hereby.
8.5 FURTHER ACTION. All consents, approvals, authorizations, exemptions
and waivers shall have been obtained and be effective and all other consents,
approvals, authorizations, exceptions and waivers from third Persons that shall
be required in order to enable the Stockholders or Phantom Stockholder to
consummate the transactions contemplated hereby shall have been obtained except
where the failure to obtain any such consents, approvals, authorizations,
exemptions
-15-
20
and waivers would not have a Material Adverse Effect on SubTech's condition or
materially hinder or impair the consummation of the transactions contemplated by
this Agreement.
8.6 NO BANKRUPTCY. None of the Stockholders or Phantom Stockholder
shall have: (i) filed for voluntary bankruptcy (or shall have commenced against
it an involuntary bankruptcy) under any chapter or section of the United States
Bankruptcy Code; (ii) been adjudged bankrupt or insolvent in proceedings filed
under any section or chapter of the United States Bankruptcy Code; (iii) made
any general assignment for the benefit of creditors; (iv) been unable, or stated
that it is unable, to pay its debts as they become due; or (v) taken any
preliminary action with respect to the matters described in clauses (i) or
(iii).
8.7 NO MATERIAL ADVERSE CHANGE. Except for any matter disclosed in this
Agreement (including the Schedules hereto) there shall not have occurred any
event or matter having a Material Adverse Effect on SubTech or its Affiliates
taken as a whole since September 30, 1999.
8.8 LEGAL OPINION. The Stockholders and Phantom Stockholder shall have
furnished an opinion of Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx in a
form reasonably acceptable to WEI regarding the transactions described in
Section 3.5(c).
ARTICLE 9
CONDITIONS TO THE STOCKHOLDERS AND
PHANTOM STOCKHOLDERS OBLIGATIONS
The obligations of the Stockholders and Phantom Stockholder shall be
subject to the satisfaction (or waiver by the Stockholders and Phantom
Stockholder) on or prior to the Closing Date of all the following conditions:
9.1 REPRESENTATIONS TRUE AND CORRECT. The representations and
warranties of WEI and Sub set forth in this Agreement shall be true and correct
at and as of the Closing Date.
9.2 PERFORMANCE OF COVENANTS. WEI shall have performed and complied in
all material respects with all covenants, agreements and conditions required by
this Agreement to be performed by or complied with by it prior to or at the
Closing.
9.3 RESOLUTIONS. The Stockholders and Phantom Stockholder shall have
received certified copies of resolutions of the Board of Directors of WEI
approving the Agreement and the transactions contemplated hereby.
9.4 GOVERNMENTAL APPROVALS. No statute, rule or regulation or order of
any court or administrative agency shall be in effect which prohibits the
Stockholders or Phantom Stockholder from consummating the transactions
contemplated hereby and no suit, action, investigation or other proceeding shall
have been instituted or threatened (other than by a Stockholder, Phantom
Stockholder or SubTech) seeking to restrain or prohibit WEI or the Stockholders
or Phantom Stockholder from consummating the transactions contemplated hereby.
-16-
21
9.5 NO MATERIAL ADVERSE CHANGE. Except for any matter disclosed in this
Agreement (including the Schedules hereto) there shall not have occurred any
event or matter having a Material Adverse Effect on WEI and its Affiliates taken
as a whole since September 30, 1999.
ARTICLE 10
INDEMNIFICATION
10.1 INDEMNIFICATION BY THE STOCKHOLDERS AND PHANTOM STOCKHOLDERS.
Except as otherwise limited by this Article 10 or Article 11 hereof, each of the
Stockholders, the Management Stockholders and Phantom Stockholder severally and
not jointly agree to indemnify, defend and hold WEI (and its subsidiaries,
including Sub, and Affiliates) and the other parties hereto and each of WEI's
and such other parties' officers, directors, employees, agents, stockholders,
affiliates and controlling persons and their respective successors and assigns
harmless from and against and in respect of all Damages directly or indirectly
suffered, incurred or realized by such party or parties, arising out of or
resulting from or relating to, directly or indirectly, any misrepresentation,
breach of warranty or breach of any covenant or agreement made or undertaken by
such Stockholder or Phantom Stockholder in this Agreement or any
misrepresentation in or omission from any other agreement, certificate, exhibit
or writing delivered to WEI by such Stockholder or Phantom Stockholder pursuant
to this Agreement.
10.2 INDEMNIFICATION BY WEI. Except as otherwise limited by this
Article 10 and Article 11 hereof, WEI agrees to indemnify, defend and hold each
Stockholder and each of their respective officers, directors, employees, agents,
stockholders and controlling Persons and their successors and assigns harmless
from and against and in respect of all Damages directly or indirectly suffered,
incurred or realized by such party, arising out of or resulting from or relating
to, directly or indirectly, any misrepresentation, breach of warranty or breach
of any covenant or agreement made or undertaken by WEI in this Agreement or any
misrepresentation in or omission from any other agreement, certificate, exhibit
or writing delivered to such Stockholder or Phantom Stockholder by WEI pursuant
to this Agreement.
10.3 NOTICE AND OPPORTUNITY TO DEFEND.
(a) If a party seeking indemnification (the "Indemnitee")
becomes aware of any matter that it believes may give rise to an indemnifiable
claim, or asserts any claim that it believes may be indemnifiable pursuant to
Sections 10.1 or 10.2 hereof, the Indemnitee shall give the party obligated to
provide indemnification (the "Indemnifying Party") prompt written notice of such
matter or claim, stating with particularity the nature of such matter or the
aforementioned claim and the amount thereof. Failure to provide such notice
shall not affect the right of the Indemnitee to indemnification except to the
extent such failure shall have resulted in liability to the Indemnifying Party
that could have been actually avoided had such notice been provided within such
required time period.
(b) If the matter that the Indemnitee believes gives rise to
an indemnifiable claim does not involve a third party claim against an
Indemnitee, the Indemnifying Party shall have 30 days from the date on which it
received notice of such claim pursuant to this Section 10.4 hereof to
-17-
22
respond to such notice. If such Indemnifying Party accepts responsibility or
does not respond within such 30-day period, Indemnifying Party shall promptly
pay to the Indemnitee the full amount of such claim. If the Indemnifying Party
rejects any liability with respect to such claim, it shall give written notice
of such objection to the Indemnitee within such 30-day period and the parties
shall seek to resolve such claim by agreement. If such claim is unable to be
resolved by agreement within 60 days following the expiration of such 30-day
period mentioned above, the parties shall resolve the matter by arbitration
pursuant to Section 13.3 hereof (excluding any requirement in Section 13.3(a)
that the parties attempt to resolve the matter by mutual agreement for a period
of 60 days prior to submitting such matter to arbitration).
(c) In the event any action, suit, proceeding or investigation
is brought against the Indemnitee by a third party which the Indemnitee believes
may give rise to an indemnifiable claim pursuant to Section 10.1 or 10.2 hereof,
the Indemnitee shall give the Indemnifying Party prompt written notice of the
commencement of such action, suit, proceeding or investigation as provided in
subsection (a) of this Section 10.4 hereof. Such Indemnifying Party shall have a
period of 30 days after receipt of such notice within which to respond to such
notice. If such Indemnifying Party accepts responsibility, such Indemnifying
Party shall be obligated to compromise or defend such matter, at its own expense
and by counsel chosen by the Indemnifying Party reasonably acceptable to the
Indemnitee. The Indemnitee shall have the right to participate at its own
expense in the defense of such asserted liability. If such Indemnifying Party
does not respond within such 30-day period or rejects responsibility for such
matter in whole or in part, the Indemnitee shall be free to pursue, without
prejudice to any of its rights hereunder, such remedies as may be available to
such party under applicable law. The Indemnitee shall cooperate fully with the
Indemnifying Party and its counsel in the defense against any such asserted
liability. Any compromise of such asserted liability by the Indemnifying Party
shall require the prior written consent of the Indemnitee, which shall not be
unreasonably withheld. If, however, the Indemnitee refuses its consent to a bona
fide offer of settlement which involves solely the payment of cash which the
Indemnifying Party wishes to accept and fully pay subject to the limitations in
Section 10.3(a), the Indemnitee may continue to pursue such matter, free of any
participation by the Indemnifying Party, at the sole expense of the Indemnitee.
In such event, the obligation of the Indemnifying Party to the Indemnitee shall
be equal to the lesser of (i) the amount of the offer of settlement which the
Indemnitee refused to accept plus the costs and expenses of the Indemnitee prior
to the date the Indemnifying Party notifies the Indemnitee of the offer of
settlement, and (ii) the actual out-of-pocket amount the Indemnitee is obligated
to pay as a result of such party's continuing to pursue such matter. An
Indemnifying Party shall be entitled to recover from the Indemnitee any
additional expenses incurred by such Indemnifying Party as a result of the
decision of the Indemnitee to pursue such matter.
10.4 EXPRESS NEGLIGENCE. THE FOREGOING INDEMNITIES SET FORTH IN THIS
ARTICLE 10 ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH
THE EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING TEXAS' EXPRESS NEGLIGENCE
RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES
BECAUSE OF THE SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR
PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF ANY OF THE INDEMNIFIED PARTIES.
-18-
23
10.5 RELEASES. AS OF THE EFFECTIVE TIME, EXCEPT FOR EXISTING CONTRACTS
SPECIFICALLY DISCLOSED IN SCHEDULE 10.5 HERETO AND RIGHTS AND CLAIMS AS AN
EMPLOYEE OF SUBTECH OR ITS AFFILIATES WITH RESPECT TO THE PAYMENT OF SALARIES
AND REIMBURSEMENT OF BUSINESS EXPENSES, EACH STOCKHOLDER AND PHANTOM STOCKHOLDER
DOES HEREBY FOR SUCH STOCKHOLDER OR PHANTOM STOCKHOLDER AND SUCH STOCKHOLDER'S
OR PHANTOM STOCKHOLDER'S AFFILIATES, HEIRS, EXECUTORS, ADMINISTRATORS AND LEGAL
REPRESENTATIVES REMISE, RELEASE, ACQUIT AND FOREVER DISCHARGE WEI, SUBTECH AND
THEIR AFFILIATES AND THEIR OFFICERS, DIRECTORS, CONTROLLING PERSONS OR ENTITIES,
EMPLOYEES, ATTORNEYS AND SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE "COMPANY
RELEASED PARTIES") OF AND FROM ANY AND ALL CLAIMS, DEMANDS, LIABILITIES,
RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION AND OBLIGATIONS OF EVERY NATURE
WHATSOEVER, LIQUIDATED OR UNLIQUIDATED, KNOWN OR UNKNOWN, MATURED OR UNMATURED,
FIXED OR CONTINGENT, WHICH SUCH STOCKHOLDER OR PHANTOM STOCKHOLDER AND SUCH
STOCKHOLDER'S OR PHANTOM STOCKHOLDER'S AFFILIATES NOW HAVE, OWN OR HOLD OR HAVE
AT ANY TIME PREVIOUSLY HAD, OWNED OR HELD AGAINST THE COMPANY RELEASED PARTIES,
INCLUDING WITHOUT LIMITATION ALL LIABILITIES CREATED AS A RESULT OF THE SOLE OR
CONTRIBUTORY NEGLIGENCE, GROSS NEGLIGENCE AND WILLFUL ACTS OF ANY COMPANY
RELEASED PARTY, EXISTING AS OF THE CLOSING OR RELATING TO ANY MATTER THAT
OCCURRED ON OR PRIOR TO THE CLOSING; PROVIDED, HOWEVER, THAT ANY CLAIMS,
LIABILITIES, DEBTS OR CAUSES OF ACTION THAT MAY ARISE IN THE CONNECTION WITH THE
FAILURE OF ANY OF THE PARTIES HERETO TO PERFORM ANY OF THEIR OBLIGATIONS
HEREUNDER, UNDER THE SUBTECH EXCHANGE AGREEMENT OR UNDER ANY OTHER AGREEMENT
RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY OR FROM ANY BREACHES BY ANY OF
THEM OF ANY REPRESENTATIONS OR WARRANTIES HEREIN OR IN CONNECTION WITH ANY OF
SUCH OTHER AGREEMENTS SHALL NOT BE RELEASED OR DISCHARGED PURSUANT TO THIS
AGREEMENT. SUCH STOCKHOLDER OR PHANTOM STOCKHOLDER REPRESENTS AND WARRANTS THAT
SUCH STOCKHOLDER OR PHANTOM STOCKHOLDER HAS NOT PREVIOUSLY ASSIGNED OR
TRANSFERRED, OR PURPORTED TO ASSIGN OR TRANSFER, TO ANY PERSON OR ENTITY
WHATSOEVER ALL OR ANY PART OF THE CLAIMS, DEMANDS, LIABILITIES,
RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION OR OBLIGATIONS RELEASED IN THIS
SECTION 10.5. SUCH STOCKHOLDER OR PHANTOM STOCKHOLDER COVENANTS AND AGREES THAT
SUCH STOCKHOLDER OR PHANTOM STOCKHOLDER WILL NOT ASSIGN OR TRANSFER TO ANY
PERSON OR ENTITY WHATSOEVER ALL OR ANY PART OF THE CLAIMS, DEMANDS, LIABILITIES,
RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION OR OBLIGATIONS RELEASED IN THIS
SECTION 10.5. SUCH STOCKHOLDER OR PHANTOM STOCKHOLDER REPRESENTS AND WARRANTS
THAT SUCH STOCKHOLDER OR PHANTOM STOCKHOLDER HAS READ AND UNDERSTANDS ALL OF THE
PROVISIONS OF THIS SECTION 10.5 AND THAT SUCH STOCKHOLDER OR PHANTOM STOCKHOLDER
HAS BEEN REPRESENTED OR
-19-
24
ADVISED BY LEGAL COUNSEL AND OTHER PROFESSIONAL ADVISORS IN CONNECTION WITH THE
NEGOTIATION, EXECUTION AND DELIVERY OF THIS AGREEMENT.
10.6 INDEMNIFICATION LIMITATIONS. The liability of each of the
Stockholders and the Phantom Stockholder under Section 10.1 for
misrepresentations or breaches of warranties set forth in Article 4 shall not
exceed (a) in the case of the Stockholders, an amount equal to the number of
shares of SubTech Common Stock owned by such Person immediately prior to the
Effective Time multiplied by $10, and (b) in the case of the Phantom
Stockholder, $75,000.
ARTICLE 11
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
All statements of fact contained in any written statement (including
financial statements), certificate, instrument or document delivered by or on
behalf of a party hereto pursuant to this Agreement shall be deemed
representations and warranties of that party. The representations and warranties
of the Management Stockholders set forth in Article 4 shall survive the Closing
Date for a period of three years from the Closing Date and shall be effective
with respect to any inaccuracy therein or breach thereof (and a claim for
indemnification under Article 10 hereof made therein) if a written notice
asserting the claim shall have been given within such period with respect to
such matter. Any claim for indemnification made during such period shall be
valid and the representations and warranties relating thereto shall remain in
effect for purposes of such indemnification notwithstanding such claim may not
be resolved within such period. Except as set forth in the preceding sentences,
the representations and warranties of the parties to this Agreement shall
survive the Closing Date and the Closing indefinitely. All covenants and
agreements contained herein shall survive the Closing indefinitely. All
representations, warranties and covenants and agreements made by the parties
shall not be affected by any investigation heretofore or hereafter made by and
on behalf of any of them and shall not be deemed merged into any instruments or
agreements delivered in connection with this Agreement or otherwise in
connection with the transactions contemplated hereby.
ARTICLE 12
REGISTRATION RIGHTS
12.1 REGISTRATION RIGHTS.
(a) WEI will use its best efforts to register under the
Securities Act the WEI Shares pursuant to a non-underwritten offering having a
period of distribution not to exceed one year from the Closing Date. In
furtherance of such obligation, WEI shall file, within 30 Business Days after
the Closing Date, with the Commission a registration statement on the
appropriate form seeking the registration for resale of the WEI Shares (the
"Registration Statement"), pursuant to a non-underwritten offering in accordance
with the plan of distribution described therein. References in this Article 12
to the WEI Shares shall be deemed to include any shares of WEI Common Stock
-20-
25
or other securities received by the Stockholders or Phantom Stockholder on
account of any stock split, stock dividend or merger of WEI.
(b) Notwithstanding anything to the contrary contained in this
Section 12.1, WEI shall not be obligated to prepare and file the Registration
Statement pursuant to this Section 12.1, or prepare or file any amendment or
supplement thereto, at any time when WEI reasonably believes that the filing
thereof, or the offering of securities pursuant thereto, would adversely affect
a pending or proposed public offering of securities of WEI, an acquisition,
merger, recapitalization, consolidation, reorganization or similar transaction
relating to WEI or negotiations, discussions or pending proposals with respect
thereto or require premature disclosure of information not otherwise required to
be disclosed to the potential detriment of WEI or disclosure of third party
information not readily available to WEI.
(c) Notwithstanding anything to the contrary contained in this
Section 12.1, WEI shall be permitted, on written notice to the Stockholders and
Phantom Stockholder, to suspend the period of sale or distribution of the WEI
Shares at any time when WEI reasonably believes that the sale or distribution
thereof would adversely affect a pending or proposed public offering of
securities of WEI, an acquisition, merger, recapitalization, consolidation,
reorganization or similar transaction relating to WEI or negotiations,
discussions or pending proposals with respect thereto or require premature
disclosure of information not otherwise required to be disclosed to the
potential detriment of WEI or disclosure of third party information not readily
available to WEI.
(d) The filing of the Registration Statement, or any amendment
or supplement thereto, by WEI may not be deferred pursuant to Section 12.1(b)
hereof, and the sale and distribution of the WEI Shares may not be suspended
pursuant to Section 12.1(c) hereof, for more than 60 days after the abandonment
or consummation (or the completion of the distribution of securities in the case
of a public offering) of any of the proposals or transactions described therein
or, in any event, for more than 150 days.
(e) The Stockholders and Phantom Stockholder agree and
covenant to fully cooperate with and assist WEI and its counsel and
representatives in connection with WEI's obligations under this Article 12,
including providing such information as requested by WEI in connection with the
preparation of the Registration Statement and the resale of the WEI Shares.
12.2 PROCEDURE. WEI will, subject to the provisions of Sections 12.1,
12.2 and 12.4 hereof:
(a) seek to cause the Registration Statement to become and
remain effective for a period of up to one year following the Closing Date or
such shorter period of time until the transfer or sale of all the WEI Shares has
been completed;
(b) as expeditiously as reasonably practicable, prepare and
file with the Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection therewith as may be necessary to
keep the Registration Statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of the WEI Shares
-21-
26
covered by the Registration Statement in accordance with the intended method of
distribution set forth therein;
(c) afford the Stockholders and the Phantom Stockholder a
reasonable opportunity to review and comment on drafts of the Registration
Statement and each amendment thereof and supplement thereto, and drafts of each
preliminary prospectus used in connection with the Registration Statement, prior
to their filing or distribution, as the case may be;
(d) as expeditiously as reasonably practicable, furnish to the
Stockholders and Phantom Stockholder such number of copies of prospectuses and
preliminary prospectuses in conformity with the requirements of the Securities
Act, and such other documents as the Stockholders and Phantom Stockholder may
reasonably request, in order to facilitate the public sale or other disposition
of the WEI Shares owned by the Stockholders and Phantom Stockholder; provided,
however, that the obligation of WEI to deliver copies of prospectuses or
preliminary prospectuses to the Stockholders and Phantom Stockholder shall be
subject to the receipt by WEI of reasonable assurances from the Stockholders and
Phantom Stockholder that they will comply with the applicable provisions of the
Securities Act and of such other securities laws as may be applicable in
connection with any use by them of any prospectuses or preliminary prospectuses;
(e) as expeditiously as practicable, use its best efforts to
register or qualify the WEI Shares under such other securities laws of such
United States jurisdictions as the Stockholders and Phantom Stockholder shall
reasonably request (considering the nature and size of the offering) and do any
and all other acts and things that may be necessary or desirable to enable the
Stockholders and Phantom Stockholder to consummate the public sale or other
disposition in such jurisdictions of the WEI Shares; provided, however, that WEI
shall not be required to qualify to transact business as a foreign corporation
in any jurisdiction in which it would otherwise not be required to be so
qualified or to take any action that would subject it to general service of
process in any jurisdiction in which it is not then so subject;
(f) notify the Stockholders and the Phantom Stockholder
promptly (i) when a prospectus or any prospectus supplement has been filed with
the Commission and, with respect to the Registration Statement or any
post-effective amendment thereto, when such document has been declared effective
by the Commission, (ii) of any request by the Commission for amendments or
supplements to the Registration Statement or related prospectus, or for
additional information, (iii) of the issuance by the Commission of any stop
order or the initiation of any proceedings for such or a similar purpose (and
WEI shall make every reasonable effort to obtain the withdrawal of any such
order as soon as practicable) and (iv) of the receipt by WEI of any notification
with respect to the suspension of the qualification of any of the WEI Shares for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose (and WEI shall use commercially reasonable efforts to obtain the
withdrawal of any such suspension as soon as practicable); and
(g) bear all Registration Expenses (as defined below) in
connection with the registration hereunder; provided, however, that all Selling
Expenses (as defined below) of the WEI Shares and all fees and disbursements of
counsel for the Stockholders and Phantom Stockholder shall be borne by the
Stockholders and Phantom Stockholder. For purposes of this Section 12.2,
expenses incurred by WEI in complying with this Agreement, including (i) all
registration and filing
-22-
27
fees, (ii) all printing expenses, (iii) all fees and disbursements of counsel
for WEI, (iv) all blue sky fees and expenses and (v) all fees and expenses of
accountants for WEI, are herein referred to as "Registration Expenses". All
brokerage and selling commissions and fees and expenses of counsel for the
Stockholders and Phantom Stockholder in connection with any such registration or
resale are herein referred to as "Selling Expenses".
12.3 INDEMNIFICATION.
(a) In the event of a registration of the WEI Shares under the
Securities Act pursuant to this Agreement, WEI will indemnify and hold harmless
each Stockholder and Phantom Stockholder and any other Person, if any, who
controls such Stockholder or Phantom Stockholder within the meaning of Section
15 of the Securities Act, against any losses, claims, damages or liabilities,
several, to which such Stockholder or Phantom Stockholder or such controlling
Person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities or actions in respect thereof arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in the Registration
Statement, any preliminary prospectus distributed with the consent of WEI or
final prospectus contained therein, or any amendment thereof or supplement
thereto, including all documents incorporated by reference therein, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will, unless WEI assumes the defense as provided in
Section 12.3(c) hereof, promptly following request and receipt of reasonable
supporting documents, such as invoices, reimburse the Stockholders and Phantom
Stockholder and each such controlling Person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that WEI will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such Registration
Statement, such preliminary prospectus, such final prospectus or such amendment
or supplement, including all documents incorporated by reference therein, in
reliance upon and in conformity with written information furnished to WEI by or
on behalf of such Stockholder or Phantom Stockholder or a controlling Person
thereof specifically for use in the preparation thereof.
(b) In the event of any registration of the WEI Shares under
the Securities Act pursuant to this Agreement, each Stockholder and Phantom
Stockholder will indemnify and hold harmless WEI and each Person, if any, who
controls WEI within the meaning of Section 15 of the Securities Act, each
officer of WEI who signs the Registration Statement and each director of WEI,
against any and all such losses, claims, damages, liabilities or actions that
WEI or such officer, director or controlling Person may become subject under the
Securities Act or otherwise, and will reimburse WEI, each such officer, director
and controlling Person for any legal or any other expenses reasonably incurred
by such party in connection with investigating or defending any such loss,
claim, damage, liability or action, if (i) such loss, claim, damage, liability
or action in respect thereof arises out of or is based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement or any such prospectus, or any amendment thereof or supplement
thereto, or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not
-23-
28
misleading and such statement or omission of a material fact was made in
reliance upon and in conformity with information furnished to WEI by or on
behalf of such Stockholder or Phantom Stockholder specifically for use in
connection with the preparation of the Registration Statement or prospectus or
(ii) such loss, claim, damage, liability or action in respect thereof arises out
of or is based upon such Stockholder's or Phantom Stockholder's failure to
deliver any required prospectus or otherwise comply with applicable laws
regarding the same.
(c) Within five days after receipt by any indemnified Person
of notice of any claim or commencement of any action in respect of which
indemnity is to be sought against an indemnifying Person pursuant to this
Agreement, such indemnified Person shall notify the indemnifying Person in
writing of such claim or of the commencement of such action, and, subject to
provisions hereinafter stated, in case any such action shall be brought against
an indemnified Person and such indemnifying Person shall have been notified of
the same, such indemnifying Person shall be entitled to participate therein,
and, to the extent it shall desire, in its sole discretion, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
Person, and after notice from the indemnifying Person to such indemnified Person
of its election to assume the defense thereof, such indemnifying Person shall
not be liable to such indemnified Person in connection with the defense thereof;
provided, however, if there exists or will exist a conflict of interest that
would make it inappropriate in the reasonable judgment of the indemnified Person
for the same counsel to represent both the indemnified Person and such
indemnifying Person then such indemnifying Person shall be entitled to retain
its own counsel at the expense of such indemnifying Person; provided further,
however, the indemnifying Person shall not be required to pay for more than one
separate counsel for all of the indemnified Persons in addition to any local
counsel. Payment of any amounts due pursuant to this Section 12.3 shall be made
within ten Business Days after notice is sent by the indemnified Person.
12.4 TERMINATION. If Rule 144 or Rule 145 as promulgated under the
Securities Act or any successor or similar rule or statute shall permit the
public sale of the WEI Shares, the rights to registration provided for in this
Agreement as to the WEI Shares shall terminate immediately.
ARTICLE 13
MISCELLANEOUS
13.1 ENTIRE AGREEMENT. This Agreement and the other agreements
contemplated hereby constitute the sole understanding of the parties with
respect to the matters provided for herein and supersedes any previous
agreements and understandings between the parties with respect to the subject
matter hereof. No amendment, modification or alteration of the terms or
provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by WEI and the affected Stockholders or Phantom
Stockholder.
13.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. Prior to the Closing Date, this Agreement may
not be assigned by any party without the prior written consent of the other
party hereto, except that WEI may, at its election, assign its rights under this
Agreement to any direct or indirect wholly owned subsidiary or other Affiliate.
Notwithstanding the
-24-
29
foregoing, no assignment of this Agreement or any of the rights or obligations
hereof by any party, as the case may be, shall relieve such party of its
obligations under this Agreement and, upon any such assignment occurring prior
to the Closing, the representations, warranties, covenants and agreements
contained in this Agreement shall be deemed to have been made by such party's
assignee as well as by such party.
13.3 ARBITRATION.
(a) In the event there shall exist any dispute or controversy
between the parties hereto with respect to this Agreement or any matter relating
hereto or the transactions contemplated hereby, the parties hereto agree to seek
to resolve such dispute or controversy by mutual agreement. If such dispute or
controversy is unable to be resolved by agreement within 60 days following
notice of the nature of such dispute or controversy setting forth in reasonable
detail the circumstances and basis of such dispute or controversy, any party
hereto, as the case may be, may require that such dispute or controversy be
resolved by binding arbitration pursuant to the provisions of this Section 13.3.
If a party elects to submit such matter to arbitration, such party shall provide
notice to the other party of its election to do so, which notice shall name one
arbitrator. Within 10 days after the receipt of such notice, the other party
shall name a second arbitrator. The two arbitrators so appointed shall name a
third arbitrator, or failing to do so, a third arbitrator shall be appointed
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association. Each arbitrator selected to act hereunder shall be qualified by
education and experience to pass on the particular question in dispute. The
arbitrators shall resolve all disputes in controversy in accordance with the
applicable substantive law. All statutes of limitations that would otherwise be
applicable shall apply to any arbitration proceeding.
(b) The arbitrators appointed pursuant to this Section 13.3
shall promptly hear and determine (after due notice and hearing and giving the
parties reasonable opportunity to be heard) the questions submitted, and shall
render their decision within 60 days after appointment of the third arbitrator
or as soon as practical thereafter. If within such period a decision is not
rendered by the board or a majority thereof, new arbitrators may be named and
shall act hereunder at the election of either party in like manner as if none
had previously been named. The decision of the arbitrators, or a majority
thereof, made in writing, shall absent manifest error be final and binding upon
the parties hereto as to the questions submitted, and each party shall abide by
such decision.
(c) All expenses of arbitration, including reasonable
compensation to the arbitrators, shall be borne equally by the disputing parties
(collectively), as the case may be, except each party shall bear the
compensation and expenses of its own counsel, witnesses and employees.
(d) Nothing contained herein shall prohibit any party from
seeking injunctive or other equitable relief pending any decision in arbitration
or from enforcing any order or decision by the arbitrators in any court or other
appropriate forum. For purposes of injunctive relief, orders in aid of
arbitration and entry of the arbitrator's award:
(i) each of the parties hereto irrevocably consents
to the non-exclusive jurisdiction of, and venue in, any state
court located in Xxxxxx County, Texas or any federal court
sitting in the Southern District of Texas in any suit, action
or proceeding
-25-
30
seeking injunctive relief, arising out of or relating to this
Agreement or any of the other agreements contemplated hereby
and any other court in which a matter that may result in a
claim for indemnification hereunder by an Indemnitee may be
brought with respect to any claim for indemnification by an
Indemnitee; and
(ii) each of the parties hereto waives, to the
fullest extent permitted by law, any objection that it may now
or hereafter have to the laying of venue of any suit, action
or proceeding seeking injunctive relief, orders in aid of
arbitration or entry of an arbitration arising out of or
relating to this Agreement or any of the other agreements
contemplated hereby brought in any state court located in
Xxxxxx County, Texas or any federal court sitting in the
Southern District of Texas or any other court in which a
matter that may result in a claim for indemnification
hereunder by an Indemnitee may be brought with respect to any
claim for indemnification by an Indemnitee, and further
irrevocably waive any claim that any such suit, action or
proceeding brought in any such court has been brought in an
inconvenient forum.
13.4 EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated, other than as expressly provided for herein, each of
the parties hereto shall pay the fees and expenses of its respective counsel,
accountants and other experts, and all other expenses incurred by such party
incident to the negotiation, preparation and execution of this Agreement and
consummation of the transactions contemplated hereby.
13.5 EFFECT OF DUE DILIGENCE. No investigation by the parties hereto or
their respective Affiliates, agents or advisers shall diminish in any way the
effect of any representations or warranties made by any party in this Agreement
or shall relieve any party of any of their respective obligations under this
Agreement.
13.6 TAKING OF NECESSARY ACTION. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees, subject to applicable laws,
to use all reasonable best efforts promptly to take or cause to be taken all
action and to promptly do or cause to be done all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement. Each party shall cooperate with
the others in good faith to help the others satisfy their obligations hereunder.
The applicable parties shall take all such necessary action.
13.7 INVALIDITY. 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 and 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.
-26-
31
13.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
13.9 HEADINGS. The headings of the Sections and paragraphs of this
Agreement are included for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
13.10 CONSTRUCTION AND REFERENCES. Words used in this Agreement,
regardless of the number or gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context shall require. Unless otherwise
specified, all references in this Agreement to Sections, paragraphs or clauses
are deemed references to the corresponding Sections, paragraphs or clauses in
this Agreement, and all references in this Agreement to Schedules or Exhibits
are references to the corresponding Schedules or Exhibits attached to this
Agreement.
13.11 MODIFICATION AND WAIVER. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof. No waiver of any of the provisions of this Agreement shall
be deemed to or shall constitute a waiver of any other provisions hereof
(whether or not similar).
13.12 NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party shall be in writing and
delivered personally, via telecopy (with receipt confirmed) or sent by
registered or certified mail, postage prepaid to the following addresses (or
other addresses as designated in writing by the applicable party):
if to the Stockholders or Phantom Stockholder, to the
addresses set forth on Annex A hereto
with copies to:
Xxxxx X. Xxxxxxxxx
Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
if to WEI, SubTech or Sub, to:
Xxxxxxxxxxx International, Inc.
000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
-27-
32
or at such other address for a party as shall be specified by like written
notice. Any notice which is delivered personally in the manner provided herein
shall be deemed to have been duly given to the party to whom it is directed upon
actual receipt by such party (or its agent for notices hereunder). Any notice
which is addressed and mailed in the manner herein provided shall be
conclusively presumed to have been duly given to the party to which it is
addressed at the close of business, local time of the recipient, on the third
day after the day it is so placed in the mail.
13.13 PUBLIC ANNOUNCEMENTS. None of the Stockholders or Phantom
Stockholder (nor any of their Affiliates) shall make any public statements,
including, without limitation, any press releases, with respect to this
Agreement and the transactions contemplated hereby without the prior written
consent of the other party (which consent may not be unreasonably withheld),
except as may be required by any Legal Requirement.
13.14 GOVERNING LAW; INTERPRETATION. This Agreement shall be construed
in accordance with and governed by the laws of Texas (without regard to laws
relating to conflict of laws).
13.15 INCORPORATION BY REFERENCE. The Schedules and Annexes identified
in this Agreement are incorporated herein by reference and made a part hereof.
SIGNATURES BEGIN ON FOLLOWING PAGE.
-28-
33
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed on its behalf on the 3rd day of February, 2000.
WEI: XXXXXXXXXXX INTERNATIONAL, INC.
By: /s/ XXXXXX X. XXXX
-------------------------------------
Xxxxxx X. Xxxx
Senior Vice President
SUB: SUBTECH ACQUISITION CORP.
By: /s/ XXXXXX X. XXXX
-------------------------------------
Xxxxxx X. Xxxx
Senior Vice President
SUBTECH: SUBTECH INTERNATIONAL, INC.
By: /s/ XXXX X. XXXXXXXX
-------------------------------------
Xxxx X. Xxxxxxxx
President
STOCKHOLDERS: /s/ XXXX X. XXXXXXXXX
---------------------------------------
Xxxx X. Xxxxxxxxx
/s/ XXXXX X. XXXXXX
---------------------------------------
Xxxxx X. Xxxxxx, individually and on
behalf of Xxxxx X. Xxxxxx XXX
*By: /s/ XXXXX X. XXXXXX */s/ Xxxxxx X. Xxxxxx
------------------- ---------------------------------------
Xxxxx X. Xxxxxx, attorney-in-fact Xxxxxx X. Xxxxxx
pursuant to Special Power of Attorney
**By: /s/ XXXX X. XXXXXXXXX **/s/ Xxxxx X. Xxxxxx
--------------------- ---------------------------------------
Xxxx X. Xxxxxxxxx, attorney-in- Xxxxx X. Xxxxxx
fact pursuant to Special Power
of Xxxxxxxx
00
XXXXXXXX XXXXXX, Ltd.
By: MC Holding Company, L.L.C.,
as General Partner
By: /s/ XXXX X. XXXXXXXX
------------------------------------
Xxxx X. Xxxxxxxx
Manager
***/s/ Iyke Ejizu
------------------------------------
Iyke Ejizu
***/s/ Xxxxxxx X. Xxxx
------------------------------------
Xxxxxxx X. Xxxx
***/s/ Xxxxxx Xxxx, Xx.
------------------------------------
Xxxxxx Xxxx, Xx.
***/s/ Xxxxx X. Xxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxx
***By: /s/ XXXX X. XXXXXXXX ***/s/ Xxxxx Xxxx Xxxxxxx
-------------------- ------------------------------------
Xxxx X. Xxxxxxxx, attorney-in- Xxxxx Xxxx Xxxxxxx
fact pursuant to Special Power
of Attorney
/s/ XXXXXXX XXXXXX
------------------------------------
Xxxxxxx Xxxxxx
/s/ XXXXX XXXXXX
------------------------------------
Xxxxx Xxxxxx
PHANTOM STOCKHOLDER: /s/ XXXXX X. XXXXX
------------------------------------
Xxxxx X. Xxxxx
35
ANNEX A
ADDRESS NOTICES & DOMICILES
STOCKHOLDER NAME AND ADDRESS RESIDENCE/DOMICILE
Xxxxxxx Xxxxxx Randeberg, Norway
Xxxxxxxxxxx 0
X-0000 Xxxxxxxxx
Xxxxxx
Facsimile: 011-47-51-48-2636
Confirm: 011-47-51-41-7882
Xxxxx Xxxxxx Stavanger, Norway
Xxxxx Xxxxx Xxxx 00
X-0000 Xxxxxxxxx
Xxxxxx
Facsimile: 011-47-51-48-2636
Confirm: 011-47-51-52-1331
Xxxxx X. Xxxxxx XXX Houston, Texas
Xxxxxxxxxxx & Co., Inc.
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Xxxx X. Xxxxxxxxx Xxxxxx, Xxxxx
00000 Xxxxxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Xxxxxx X. Xxxxxx Houston, Texas
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Xxxxx X. Xxxxxx Xxxxxx, Xxxxx
00000 Xxxxxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Xxxxxxxx Estate, Ltd. Texas
c/o MC Holding Company, L.L.C General Partner
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
A-1
36
Iyke Ejizu PAI
0000 Xxxx Xxxxxxx #000 Xxxxx, Xxxxxxx
P. O. Xxx 00000
Xxxxxxxx Xxxxxx Xxxxx
Xxxxx, Xxxxxxx
Facsimile: 011-234-1-262-4477
Confirm: 011-234-1-262-4904
Xxxxxxx X. Xxxx Aberdeen, Scotland
0 Xxxxxxxxxxxx XXX
Xxxxxxxxx
Xxxxxxxx, Xxxxxxxx
Facsimile: 011-44-1224-867-330
Confirm: 011-44-1224-861-978
Xxxxxx Xxxx Xx. Singapore
Bredero Price International B.V.
000 Xxxxxxx Xxxx
#00-00000 Xxxxxxx Xxxxxx
Xxxxxxxxx 000000
Facsimile: 000-00-000-0000
Confirm: 000-00-000-0000
Xxxxx X. Xxxxxxxx Xxxxxxx, Xxxxx
00000 Monteverde
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Xxxxx Xxxx Xxxxxxx Houston, Texas
c/o Xxxx X. Xxxxxxxx
00000-X Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Xxxxx X. Xxxxx The Woodlands, Texas
000 Xxxx Xxxxxx Xxxx
Xxx Xxxxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
X-0
00
XXXXXXXX 5.5
OWNERSHIP OF SUBTECH COMMON STOCK
STOCKHOLDER NO. SHARES
----------- ----------
Xxxxxxx Xxxxxx 49,000
Xxxxx Xxxxxx 49,000
Xxxxx X. Xxxxxx XXX, 96,911
Xxxxxxxxxxx & Co., Inc.
Xxxx X. Xxxxxxxxx 96,911
Xxxxxx X. Xxxxxx 1,089
Xxxxx X. Xxxxxx 1,089
Xxxxxxxx Estate Ltd. 44,194
Iyke Ejizu 18,763
Xxxxxxx X. Xxxx 53,594
Xxxxxx Xxxx, Xx. 67,973
Xxxxx X. Xxxxxxxx 692
Xxxxx Xxxx Xxxxxxx 2,977
38
SCHEDULE 10.5
AGREEMENTS BETWEEN SUBTECH AND THE STOCKHOLDERS
AND PHANTOM STOCKHOLDERS
1. SubTech Exchange Agreement
2. Employment Agreements dated November 4, 1998, between SubTech and each
of the following:
a. Xxxx X. Xxxxxxxx
b. Xxxx X. Xxxxxxxxx
c. Xxxxx X. Xxxxxx
x. Xxxxx X. Xxxxxxxx
3. Employment Contracts dated November 4, 1998, between Subsurface
Technology AS and each of Xxxxxxx Xxxxxx and Xxxxx Xxxxxx.
