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EXHIBIT 2.2
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STOCK PURCHASE AGREEMENT
BY AND BETWEEN
ENTERRA PETROLEUM EQUIPMENT GROUP, INC.,
AND
NATIONAL TANK COMPANY
AND JOINED HEREIN FOR THE LIMITED PURPOSES HEREINAFTER SET FORTH BY
XXXXXXXXXXX ENTERRA, INC.
MAY 7, 1997
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TABLE OF CONTENTS
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ARTICLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PURCHASE AND SALE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Transfer of Shares to Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Purchase Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Transfer Taxes and Recording Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
REPRESENTATIONS AND WARRANTIES OF THE SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Corporate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Capital Stock and Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Validity of Agreement and Conflict with Other Instruments . . . . . . . . . . . . . . . . 5
2.4 Approvals and Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.7 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.9 No Adverse Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.10 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.11 Warranties and Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.12 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.14 Minute Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.15 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.16 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.17 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.18 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
REPRESENTATIONS AND WARRANTIES OF THE BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.1 Corporate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2 Approvals and Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.3 Financing Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.4 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Cooperation; Record Retention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Repurchase of Uncollected Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . 17
4.4 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.5 Proprietary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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4.6 Use of Corporate Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.7 Conduct of the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.8 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.9 Governmental Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.10 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
JOINT CONDITIONS TO THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.1 Laws, Regulations and Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 No Restraining Order; Absence of Certain Actions . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
BUYER'S CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1 Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . 23
6.2 Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.3 Instruments of Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.4 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.5 Consents of Third Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.6 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.7 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.8 Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SELLER'S CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.1 Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . . 25
7.2 Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.3 Receipt of the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.4 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1 Survival Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2 Indemnification by the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.3 Indemnification by the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.4 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.5 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.6 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.7 Failure to Pay Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.8 Adjustment of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.9 Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.10 Express Negligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.1 Events of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.2 Liability Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.3 Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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ARTICLE 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
DEFINITIONS OF CERTAIN TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.1 Tax Returns for Pre-Closing Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.2 Tax Returns for Post-Closing Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.3 Allocation of Franchise Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.4 Preparation of Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.1 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.4 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.9 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.12 Negotiated Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
JOINDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into this 7th day of
May, 1997, by and between Enterra Petroleum Equipment Group, Inc., a Delaware
corporation (the "Seller"), and National Tank Company, a Delaware corporation
(the "Buyer"), and joined herein for the limited purposes hereinafter set forth
by Xxxxxxxxxxx Enterra, Inc., a Delaware corporation ("Weatherford").
W I T N E S S E T H :
WHEREAS, the Seller owns all of the issued and outstanding shares of
capital stock of Total Engineering Services Team, Inc., a Louisiana corporation
(the "Company"), which, together with the Subsidiaries, operates the Business;
WHEREAS, the Seller desires to sell, and the Buyer desires to acquire,
all the issued and outstanding shares of capital stock of the Company;
WHEREAS, in connection with such transaction, the parties hereto
desire to set forth certain representations, warranties and agreements, all as
more fully set forth below; and
WHEREAS, capitalized terms used but not defined in the textual
provisions of this Agreement are defined in Article 10 herein and are used
herein with the meanings ascribed to them therein.
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 Transfer of Shares to Buyer. Subject to the terms and
conditions of this Agreement and in consideration of the obligations of the
Buyer as provided herein, at the Closing, the Seller shall sell, assign,
transfer and deliver to the Buyer, and the Buyer shall purchase and acquire
from the Seller, good title, free and clear of any Liens, to all of the issued
and outstanding shares (the "Shares") of Common Stock, par value $10.00 per
share.
1.2 Consideration. Subject to the terms and conditions of this
Agreement and in consideration of the obligations of the Seller as provided
herein, the Buyer shall pay the Cash Purchase Price as follows:
(a) At the Closing, the Buyer shall deliver to the Seller
cash in the amount of $22,475,000 (the "Closing Payment").
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(b) Pursuant to the provisions of Section 1.4 hereof, as
appropriate,
(i) the Buyer shall deliver to the Seller cash
equal to the amount by which the Cash Purchase Price exceeds
the Closing Payment; or
(ii) the Seller shall deliver to the Buyer cash
equal to the amount by which the Closing Payment exceeds the
Cash Purchase Price.
(c) Payments of the Closing Payment and the amount due
and payable pursuant to the provisions of Section 1.4 hereof shall be made in
same day funds by wire transfer to such account and at such location as the
Seller or the Buyer, as the case may be, may reasonably direct by notice
received by the payor at least two Business Days before the Closing Date or the
date payment is due and payable pursuant to the provisions of Section 1.4
hereof, as the case may be.
(d) The parties hereto acknowledge that, in determining
the Cash Purchase Price, the parties have ascribed no consideration to the
consolidated cash and cash equivalents of the Company and the Subsidiaries as
of the Closing Date. Accordingly, notwithstanding anything contained in this
Agreement to the contrary, at the Closing the Company shall pay to the Seller
an amount equal to the cash and cash equivalents of the Company as of the
Closing Date. No such payment shall be deemed to be a part of the Cash
Purchase Price. From and after the Closing, all cash and cash equivalents
received or acquired by the Company shall be for the account of the Company
and, indirectly as the owner of all the outstanding capital stock of the
Company, the Buyer.
(e) The parties hereto further acknowledge that, in
determining the Cash Purchase Price, the parties have ascribed no consideration
to any net consolidated intercompany account payable (an "Intercompany
Payable") by the Company and the Subsidiaries to the Seller or any Affiliate of
the Seller or to any net consolidated intercompany account receivable (an
"Intercompany Receivable") of the Company and the Subsidiaries from the Seller
or any Affiliate of the Seller that may exist on the Closing Date.
Accordingly, notwithstanding any provision in this Agreement to the contrary,
at the time of the payment contemplated by Section 1.4 hereof, the Company
shall forgive any Intercompany Receivable and the Seller shall forgive any
Intercompany Payable.
1.3 Closing. Subject to the conditions set forth in this
Agreement, the Closing shall take place at the offices of Fulbright & Xxxxxxxx
L.L.P., located at 0000 XxXxxxxx, Xxxxxxx, Xxxxx, at such time, date and place
as the parties hereto shall mutually agree upon in writing (the "Closing
Date"). At the Closing, the Seller shall deliver to the Buyer a certificate or
certificates evidencing the Shares, together with stock powers for the same
duly executed in blank by the Seller, and the parties hereto shall deliver all
other documents reasonably deemed necessary or desirable by the parties hereto
to evidence the fulfillment or waiver of all conditions precedent to
consummation of the transactions contemplated by this Agreement. Nothing
contained herein shall be deemed to require or permit the Buyer to purchase
less than all the
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Shares. Failure to consummate the transactions contemplated hereby on such
date shall not result in a termination of this Agreement or relieve any party
hereto of any obligation hereunder. Title to and ownership of the Shares, and
control over and risk of loss with respect to the Shares and the Business,
shall pass to the Buyer at the Closing.
1.4 Purchase Price Adjustment.
(a) Within 90 calendar days after the Closing Date, the
Buyer shall prepare and deliver to the Seller a statement as of the Closing
Date reflecting the Cash Purchase Price and the calculation thereof (the "Final
Statement"). The elements of the definition of Cash Purchase Price contained
in the Final Statement shall be derived from consolidated financial statements
of the Company and the Subsidiaries as of the Closing Date and for the period
commencing on January 1, 1997 and ended on the Closing Date (the "Company's
Closing Financial Statements"), which shall be prepared in accordance with
generally accepted accounting principles applied consistently with those used
to prepare the Company's Financial Statements; provided, however, that, for
purposes of determining the Cash Purchase Price, the assets consisting of any
cash and cash equivalents paid by the Company to the Seller pursuant to Section
1.2(d) hereof, any Intercompany Receivable to be forgiven pursuant to Section
1.2(e) hereof and the liability consisting of any Intercompany Payable to be
forgiven pursuant to Section 1.2(e) hereof shall be excluded from the Company's
Closing Financial Statements. The determination of the Cash Purchase Price
shall be consistent with the methodology exemplified in Annex A attached hereto
and that by this reference is incorporated herein. The Buyer shall provide the
Seller with access to copies of all work papers and other relevant documents to
verify the entries contained in the Final Statement. The Seller shall have a
period of 15 calendar days after delivery to it of the Final Statement to
review it and make any objections the Seller may have in writing to the Buyer.
If written objections to the Final Statement are delivered to the Buyer within
such 15 day period, then the Buyer and the Seller shall attempt to resolve the
matter or matters in dispute. If no written objections are made within the
time period provided above, the Buyer shall pay to the Seller, in accordance
with Section 1.2(c) hereof, the aggregate amount, if any, by which the Cash
Purchase Price exceeds the Closing Payment and the Seller shall pay to the
Buyer, in accordance with Section 1.2(c) hereof, the aggregate amount, if any,
by which the Closing Payment exceeds the Cash Purchase Price, in each case on
the third Business Day following the end of such 15 day period.
(b) If disputes exist with respect to the Final Statement
and cannot be resolved by the Buyer and the Seller within 15 calendar days
after the delivery of the objections to the Final Statement, then the specific
matters in dispute shall be submitted to such independent accounting firm as
may be approved by the Buyer and the Seller, which firm shall render its
opinion as to such matters. Based on such opinion, such independent accounting
firm will then send to the Buyer and the Seller its determination on the
specific matters in dispute, which determination shall be final and binding on
the parties hereto. On the third Business Day following delivery of such
opinion to the Buyer and the Seller, the Buyer shall pay to the Seller, in
accordance with Section 1.2(c) hereof, the aggregate amount, if any, by which
the Cash
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Purchase Price exceeds the Closing Payment and the Seller shall pay to the
Buyer, in accordance with Section 1.2(c) hereof, the aggregate amount, if any,
by which the Closing Payment exceeds the Cash Purchase Price. The fees and
other costs charged by such independent accounting firm shall be borne by the
Buyer and the Seller equally.
1.5 Transfer Taxes and Recording Fees. The Buyer shall pay and
be responsible for the aggregate amount of all federal, state, county, local or
foreign sales, use, value added, transfer, stamp and other similar Taxes, and
transfer, recording or similar fees and charges, imposed in connection with or
as a result of the consummation of the transactions contemplated by this
Agreement. The Buyer hereby agrees to indemnify the Seller and its Affiliates
against, and agrees to protect, save and hold the Seller and its Affiliates
harmless from, any loss, liability, obligation or claim (whether or not
ultimately successful) for federal, state, county, local or foreign sales, use,
value added, transfer, stamp and other similar Taxes (and any interest,
penalties, additions to tax and fines thereon or related thereto), and
transfer, recording or similar fees and charges, imposed in connection with or
as a result of the consummation of the transactions contemplated by this
Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as otherwise set forth in the Disclosure Schedule, the Seller
represents and warrants to the Buyer as follows:
2.1 Corporate Matters.
(a) Weatherford, the Seller, the Company and each
Subsidiary are corporations duly incorporated, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation.
Each of the Company and the Subsidiaries has all requisite power and authority
under all applicable Laws, Regulations, Orders and Authorizations to own,
operate and lease its properties and assets and to carry on the Business in the
manner currently conducted, and is in good standing as a foreign corporation in
each jurisdiction in which the nature of the properties owned or leased by it
or the business transacted by it requires it to be so licensed or qualified,
except where the failure to be so qualified or licensed would not have a
Material Adverse Effect. Each State in which the Company or a Subsidiary is
qualified to do business is listed in Section 2.1(a) of the Disclosure
Schedule. Weatherford and the Seller each has all requisite corporate power
and authority to enter into this Agreement and to perform its obligations under
this Agreement.
(b) True, correct and complete copies of the Articles of
Incorporation and the Bylaws, or similar corporate documents, of the Company
and each Subsidiary have been provided by the Seller to the Buyer, and such
Articles of Incorporation, Bylaws and similar corporate documents are in full
force and effect.
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(c) The only subsidiaries of the Company are the
Subsidiaries. Neither the Company nor any Subsidiary controls, or owns any
investment in the equity of, any other Person.
(d) Set forth in Section 2.1(d) of the Disclosure
Schedule is a list of assumed names under which the Company and the
Subsidiaries operate the Business.
2.2 Capital Stock and Ownership.
(a) The total number of shares of capital stock, and the
classes and par values thereof, that each of the Company and the Subsidiaries
is authorized to issue and the numbers of such shares that are issued and
outstanding are as set forth in Section 2.2(a) of the Disclosure Schedule. No
shares of such capital stock are held in the treasury of the Company or any
Subsidiary and no shares of such capital stock are reserved for issuance by the
Company or any Subsidiary.
(b) The Shares (i) constitute all the issued and
outstanding shares of capital stock of the Company, (ii) are owned of record
and beneficially by the Seller, free and clear of any Liens and (iii) have been
duly authorized and validly issued, are fully paid and nonassessable and were
issued without violating the preemptive rights of any Person.
(c) All the issued and outstanding shares of capital
stock of each Subsidiary are owned of record and beneficially by the Company
and have been duly authorized and validly issued, are fully paid and
nonassessable, were issued without violating the preemptive rights of any
Person and are free and clear of any Liens.
(d) There are not outstanding any (i) securities of the
Company or any Subsidiary that are convertible into or exchangeable for any
shares of capital stock or other securities of the Company or any Subsidiary,
(ii) subscriptions, options, warrants or other rights obligating the Company or
any Subsidiary to issue, or entitling any third party to acquire from the
Company or any Subsidiary, any shares of capital stock or other securities of
the Company or any Subsidiary or (iii) other than this Agreement, agreements or
understandings with respect to the sale, assignment, transfer, pledge or voting
of, or dividends or distributions on, or relating to any other restriction or
limitation on the rights of a holder of, shares of capital stock of the Company
or any Subsidiary.
(e) There are no contracts, agreements, commitments or
arrangements obligating the Company or any Subsidiary to redeem, purchase or
acquire, or offer to purchase or acquire, any shares of, or any outstanding
option, warrant or right to purchase or acquire, or any securities that are
convertible into or exchangeable for, any shares of, any class of capital stock
of the Company.
2.3 Validity of Agreement and Conflict with Other Instruments.
(a) This Agreement, and all transactions contemplated
hereby, have been duly authorized and approved by all necessary corporate
action on the part of the
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Seller. No further corporate action is necessary on the part of the Seller to
execute and deliver this Agreement or to perform its obligations hereunder,
including consummation of the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Seller and is a legal, valid and
binding obligation of the Seller enforceable against the Seller in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect that affect creditors' rights generally and by legal and
equitable limitations on the availability of specific remedies. The execution,
delivery and performance of this Agreement by Weatherford for the limited
purposes herein expressed have been duly authorized and approved by all
necessary corporate action on the part of Weatherford, and this Agreement has
been duly executed and delivered by Weatherford for such limited purposes and
is a legal, valid and binding agreement of Weatherford for such purposes
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws from time to time in effect that affect creditors' rights
generally and by legal and equitable limitations on the availability of
specific remedies.
(b) The execution, delivery and performance of this
Agreement and the other agreements and documents to be delivered by the Seller
to the Buyer pursuant hereto, the consummation of the transactions contemplated
hereby or thereby and the compliance with the provisions hereof or thereof by
the Seller will not, with or without the passage of time or the giving of
notice or both:
(i) conflict with, constitute a breach, violation
or termination of any provision of, or give rise to any right
of termination, cancellation or acceleration, or loss of any
right or benefit or both, under, any of the Contracts and
Other Agreements,
(ii) conflict with or violate the Certificate of
Incorporation, Bylaws or similar corporate documents of the
Seller, the Company or any Subsidiary,
(iii) result in the creation or imposition of any
Lien on any of the Shares or on any of the assets of the
Company or any Subsidiary,
(iv) subject to fulfillment of the condition
precedent set forth in Section 5.1 hereof, violate any Law,
Regulation, Order or any other restriction of any kind or
character applicable to the Seller, the Company or any
Subsidiary or any of their respective properties or assets,
or
(v) result in the termination, forfeiture,
revocation, suspension or adverse modification of any
Authorization,
other than conflicts, breaches, violations, terminations, Liens, forfeitures,
revocations, suspensions or modifications that would not materially and
adversely affect the ability of the Seller to consummate the transactions
provided for in this Agreement and that would not have a Material Adverse
Effect.
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2.4 Approvals and Authorizations.
(a) Other than notices given pursuant to the HSR Act, no
Order or Authorization of, or exemption by, or the giving of notice to, or the
registration with, or the taking of any other action in respect of, any Person
not a party to this Agreement, including any Governmental Entity, and no
filing, recording, publication or registration in any public office or any
other place is now, or under existing law in the future will be, necessary on
behalf of the Seller, Weatherford, the Company or any Subsidiary to authorize
the execution, delivery and performance of this Agreement by the Seller or
Xxxxxxxxxxx or any other agreement contemplated hereby to be executed and
delivered by the Seller and the consummation of the transactions contemplated
hereby or thereby, or to effect the legality, validity, binding effect or
enforceability thereof.
(b) All material Authorizations of all Governmental
Entities required or necessary for the Company and the Subsidiaries to carry on
the Business in the places and in the manner currently conducted have been duly
obtained and are in full force and effect. No material violation has occurred
under any such Authorization, no proceeding is pending or, to the knowledge of
the Seller, threatened with respect to the revocation or limitation of any of
such Authorization, and, to the knowledge of the Seller, no event has occurred
that permits, or with the passage of time or the giving of notice or the taking
of action by a third Person would permit, revocation or limitation of any such
Authorization. The Company and the Subsidiaries have complied with all Laws,
Regulations and Orders applicable to the Business, including those respecting
the provision of services by the Company and the Subsidiaries, except for
violations that would not have a Material Adverse Effect.
2.5 Financial Statements. The Seller has delivered to the Buyer
a true and complete copy of the Company's Financial Statements. The Company's
Financial Statements present fairly the consolidated financial position of the
Company and the Subsidiaries and the results of their operations, stockholders'
equity and cash flows as of the dates and for the periods indicated therein in
conformity with generally accepted accounting principles consistently applied.
The Company's Financial Statements do not include any material income or assets
or omit to state any material expenses or liabilities, absolute or contingent,
and do not include or omit to state any other facts that render the Company's
Financial Statements materially misleading as of the date thereof.
2.6 Title to Properties.
(a) The Company or the Subsidiaries, individually or
together, have good title to all of the properties reflected in the Company's
Financial Statements, other than any properties that have been sold or
otherwise disposed of since the date thereof in the ordinary course of business
and consistent with past practice or that are not, individually or in the
aggregate, material to the Company, free and clear of Liens, other than (i)
Liens the existence of which is reflected in the Company's Financial
Statements, (ii) Permitted Liens and (iii) Liens that, individually or in the
aggregate, would not have a Material Adverse Effect. The Company or the
Subsidiaries,
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individually or together, hold under valid lease agreements all real and
personal properties reflected in the Company's Financial Statements as being
held under capitalized leases, and all real and personal property that is
subject to the operating leases to which reference is made in the notes to the
Company's Financial Statements, and enjoy peaceful and undisturbed possession
of such properties under such leases, other than (i) any properties as to which
such leases have expired in accordance with their terms since December 31, 1996
without any liability of any party thereto and (ii) any properties that,
individually or in the aggregate, are not material to the Company.
(b) Either the Company or a Subsidiary owns or possesses
licenses or other rights to use all rights to all Proprietary Rights necessary
for the conduct of the Business as currently conducted. Set forth in Section
2.6(b) of the Disclosure Schedule is a complete and accurate list of all
patents, trademarks and licenses the Company and the Subsidiaries own or
possess or otherwise have rights to use and all patents, trademarks and
licenses that the Company and the Subsidiaries own or possess or otherwise have
rights to use, together with a brief description of the nature of such
ownership, possession or right to use. No licenses, sublicenses, covenants or
agreements have been granted or entered into by the Company or any Subsidiary
in respect of the items listed in Section 2.6(b) of the Disclosure Schedule
except as noted thereon. Neither the Company nor any Subsidiary has received
any notice of infringement, misappropriation or conflict from any other Person
with respect to such Proprietary Rights and, to the knowledge of the Seller,
the conduct of the Business has not infringed, misappropriated or otherwise
conflicted with any Proprietary Rights of any such Person. All of the
Proprietary Rights that are owned by the Company and the Subsidiaries are owned
free and clear of all Liens. All Proprietary Rights that are licensed by the
Company or any Subsidiary from third parties are licensed pursuant to valid and
existing license agreements and such interests are not subject to any Liens
other than those under the applicable license agreements. The consummation of
the transactions contemplated by this Agreement will not result in the loss of
any Proprietary Rights and will not conflict with, constitute a breach,
violation or termination of, any agreement or understanding, whether written or
otherwise, relating to any Proprietary Rights necessary for the conduct of the
Business as currently conducted.
2.7 Contracts and Commitments.
(a) Neither the Company nor any Subsidiary is a party to
or bound by:
(i) any agreement, contract or commitment
requiring the expenditure or series of related expenditures
of funds by the Company and the Subsidiaries in excess of
$50,000 (other than purchase orders in the ordinary course of
business for goods necessary for the Company or the
Subsidiaries to complete then existing contracts or purchase
orders);
(ii) any loan or advance to, or investment in, any
Person by the Company or any Subsidiary or any agreement,
contract, commitment or
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understanding relating to the making by the Company or any
Subsidiary of any such loan, advance or investment;
(iii) any material Debt Obligations;
(iv) any management service, employment,
consulting or other similar type contract or agreement;
(v) any sales, distributorship or similar
agreement relating to the products sold or services provided
by the Company or the Subsidiaries;
(vi) any license, royalty or similar agreement
relating to any Proprietary Information of the Company or any
Subsidiary; or
(vii) any collective bargaining or other labor
union agreement.
(b) Set forth in Section 2.7(b) of the Disclosure
Schedule is a list of guarantees of, and performance bonds acquired by,
Xxxxxxxxxxx or any of its Affiliates relating to the Business.
(c) Neither the Company nor any Subsidiary is in breach
of any provision of, or in default (nor does the Seller have knowledge of any
event or circumstance that with notice, or lapse of time or both, would
constitute an event of default) under the terms of any of the Contracts and
Other Agreements except for breaches or defaults that would not have a Material
Adverse Effect. All of the Contracts and Other Agreements are in full force
and effect. There are no pending or, to the knowledge of the Seller,
threatened disputes with respect to any of the Contracts and Other Agreements.
(d) The enforceability of the Contracts and Other
Agreements will not be affected in any manner by the execution and delivery of
this Agreement by the Seller or the performance of its obligations hereunder,
including consummation of the transactions contemplated hereby.
2.8 Litigation. There is no action, suit, claim, investigation
or legal, administrative, arbitration or other proceeding, or governmental
investigation or examination, or any change in any zoning or building ordinance
pending or, to the knowledge of the Seller, threatened against or affecting the
Company or any Subsidiary, at law or in equity, before or by any Governmental
Entity.
2.9 No Adverse Changes or Events. Since December 31, 1996, the
Business has been consistently operated only in the ordinary course, and there
has not been:
(a) any Material Adverse Effect;
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(b) any damage, destruction or loss, whether or not
covered by insurance, materially adversely affecting the Company and the
Subsidiaries, taken as a whole; or
(c) any event the occurrence of which between the date
hereof and the Closing Date is prohibited by Section 4.8 hereof.
2.10 Environmental Matters. The sole representations of the
Seller with respect to environmental matters are set forth in this Section
2.10. To the extent representations in other sections of this Agreement also
could apply to environmental matters, including matters related to, arising
under or concerning Environmental Laws, such representations shall be construed
to exclude all environmental matters and to apply to matters other than
environmental matters. Except for matters that, individually or in the
aggregate, would not have a Material Adverse Effect, (a) the properties,
operations and activities of the Company and the Subsidiaries are in compliance
with all applicable Environmental Laws and Environmental Permits; (b) the
Company and the Subsidiaries and the properties and operations of the Company
and the Subsidiaries are not subject to any pending or, to the knowledge of the
Seller, threatened action, suit, investigation, inquiry or proceeding by or
before any court or Governmental Entity under any Environmental Law; (c) there
has been no release of any Hazardous Material or any other pollutant or
contaminant into the environment by the Company or the Subsidiaries or in
connection with their properties or operations; (d) there has been no exposure
of any Person or property to any Hazardous Material or any other pollutant or
contaminant in connection with the properties, operations and activities of the
Company and the Subsidiaries; and (e) the Company and the Subsidiaries have
made available to the Buyer all internal and external environmental audits and
studies and significant correspondence on substantial environmental matters (in
each case relevant to the Company or any of the Subsidiaries) in the possession
of the Company, the Subsidiaries or the Seller.
2.11 Warranties and Product Liability. Except for (i) warranties
implied by law and (ii) warranties disclosed in Section 2.11 of the Disclosure
Schedule, neither the Company nor any Subsidiary has given or made any
warranties in connection with the sale or rental of goods or services on or
prior to the Closing Date, including warranties covering the customer's
consequential damages. There is no pending or, to the knowledge of the Seller,
threatened claim, and, to the knowledge of the Seller, no state of facts exists
and no event has occurred that would form the basis of a claim, against the
Company or the Subsidiaries with respect to warranties relating to products
manufactured, sold or distributed by, or services performed by or on behalf of,
the Company or the Subsidiaries on or prior to the Closing Date except any
claim that would not individually or in the aggregate have a Material Adverse
Effect.
2.12 Inventories. The inventories reflected in the Company's
Financial Statements in excess of the reserve, if any, for excess and obsolete
inventories, will be in all material respects saleable or usable in the
ordinary course of business and consistent with past practice.
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2.13 Insurance. Section 2.13 of the Disclosure Schedule sets
forth all insurance policies held by the Company and the Subsidiaries that are
material to the Company and the Subsidiaries, taken as a whole. All such
policies are in full force and effect and all premiums due thereon have been
paid. To the knowledge of the Seller, the Company and the Subsidiaries have
provided claims notification to the underwriters under the applicable insurance
policies with respect to all claims that have been asserted against the Company
or any Subsidiary that, if supported, would be covered by such policies.
2.14 Minute Books. The minute books of the Company and each
Subsidiary that have been made available to the Buyer for review constitute all
of the minute books of the Company and each Subsidiary and contain a complete
and accurate record of all resolutions and formal actions of the stockholders
and directors (and any committees thereof) of the Company and each Subsidiary,
in each case, in their respective capacities as such.
2.15 Powers of Attorney. Except as set forth in Section 2.15 of
the Disclosure Schedule, no Persons hold powers of attorney for the Company or
any Subsidiary except for revocable limited powers of attorney granted in
connection with ad valorem, franchise and other state and local taxes or other
routine business matters.
2.16 Finder's Fees. Except for fees payable to Xxxxxxx Xxxxx &
Co. and Xxxxxxx & Company International, neither the Seller nor any Affiliate
of the Seller has employed or retained any investment banker, broker, agent,
finder or other Person, or incurred any obligation for brokerage fees, finder's
fees or commissions, with respect to the sale by the Seller of the Shares 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 any party hereto may be obligated to pay such a fee or
commission. The Seller agrees to indemnify and hold the Buyer and its
Affiliates harmless from and against any and all claims, liabilities or
obligations with respect to all fees, commissions or expenses asserted by any
Person (including Xxxxxxx Xxxxx & Co. and Xxxxxxx & Company International) on
the basis of any act, statement, agreement or commitment alleged to have been
made by the Seller or any Affiliate of the Seller with respect to any such fee,
commission or expense.
2.17 Tax Matters.
(a) All returns and reports of or with respect to any
Taxes that are required to be filed on or before the Closing Date by or with
respect to the Company or any Subsidiary ("Tax Returns") have been or will be
duly and timely filed.
(b) All Taxes that are due with respect to the periods
covered by such Tax Returns have been or will be timely paid in full.
(c) All Tax withholding requirements imposed on or with
respect to the Company or any Subsidiary have been satisfied in full in all
respects.
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(d) No assessment, deficiency or adjustment has been
asserted in writing or, to the knowledge of the Seller, otherwise with respect
to any such Tax Return.
(e) There is not in force any extension of time with
respect to the due date for the filing of any such Tax Return or any waiver or
agreement for or consent to any extension of time for the assessment or payment
of any Tax due with respect to the period covered by any such Tax Return.
2.18 Employee Matters.
(a) Each Benefit Plan is listed in Section 2.18(a) of
the Disclosure Schedule. True and correct copies of each of the following, to
the extent applicable, have been made available to the Buyer with respect to
each Benefit Plan: the most recent annual report (Form 5500) filed with the
IRS, the plan document, the trust agreement, the most recent summary plan
description and the most recent determination letter, if any, issued by the IRS
with respect to any Benefit Plan intended to be qualified under Section 401 of
the Code.
(b) With respect to the Benefit Plans, to the knowledge
of the Seller, no event has occurred and there exists no condition or set of
circumstances in connection with which the Company or any Subsidiary could be
subject to any liability under the terms of such Benefit Plans, ERISA, the Code
or any other applicable Law, except as would not have a Material Adverse
Effect.
(c) As to any Benefit Plan intended to be qualified under
Section 401 of the Code, to the knowledge of the Seller such Benefit Plan
satisfies in form the requirements of Section 401 of the Code, except as would
not have a Material Adverse Effect.
(d) Any Terminated Benefit Plan intended to have been
qualified under Section 401 of the Code received a favorable determination
letter from the IRS with respect to its termination, and no Terminated Benefit
Plan was subject to Title IV of ERISA.
(e) To the knowledge of the Seller, there are no actions,
suits or claims pending (other than routine claims for benefits) or threatened
against, or with respect to, any of the Benefit Plans or their assets, except
as would not have a Material Adverse Effect.
(f) There is no matter pending (other than routine
qualification determination filings) with respect to any Benefit Plans before
the IRS or the Department of Labor.
(g) All contributions required to be made to the Benefit
Plans pursuant to their terms and provisions have been made timely.
(h) No Benefit Plan is subject to Title IV of ERISA.
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(i) In connection with the consummation of the
transactions contemplated by this Agreement, no payments have been or will be
made under any Benefit Plans or any of the programs, agreements, policies or
other arrangements described in Section 2.18(k) of the Disclosure Schedule
that, in the aggregate, would be nondeductible under Section 280G of the Code.
(j) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not (i) require the
Company or any Subsidiary to make a larger contribution to, or pay greater
benefits under, any Benefit Plan or any of the programs, agreements, policies
or other arrangements described in Section 2.18(k) of the Disclosure Schedule
than it otherwise would or (ii) create or give rise to any additional vested
rights or service credits under any Benefit Plan or any of such programs,
agreements, policies or other arrangements.
(k) Except as set forth in Section 2.18(k) of the
Disclosure Schedule, neither the Company nor any Subsidiary is a party to or is
bound by any severance agreement, program or policy. True and correct copies
of all employment agreements with officers of the Company and the
Subsidiaries, and all vacation, overtime and other compensation policies of the
Company and the Subsidiaries relating to their employees, have been made
available to the Buyer.
(l) No Benefit Plan provides retiree medical or retiree
life insurance benefits to any Person and neither the Company nor any
Subsidiary is contractually or otherwise obligated (whether or not in writing)
to provide any Person with life insurance or medical benefits upon retirement
or termination of employment, other than as required by the provisions of
Sections 601 through 608 of ERISA and Section 4980B of the Code. Each Benefit
Plan or other arrangement described in Section 2.18(l) of the Disclosure
Schedule may be unilaterally amended or terminated in its entirety without
liability except as to benefits accrued thereunder prior to such amendment or
termination.
(m) With respect to any employee benefit plan, within the
meaning of Section 3(3) of ERISA, that is not listed in Section 2.18(a) of the
Disclosure Schedule but that is sponsored, maintained or contributed to, or has
been sponsored, maintained or contributed to within six years prior to the
Closing Date, by any corporation, trade, business or entity under common
control with the Company, within the meaning of Section 414(b), (c) or (m) of
the Code or Section 4001 of ERISA ("Commonly Controlled Entity"), (i) no
withdrawal liability, within the meaning of Section 4201 of ERISA, has been
incurred, which withdrawal liability has not been satisfied, (ii) no liability
to the Pension Benefit Guaranty Corporation has been incurred by any Commonly
Controlled Entity, which liability has not been satisfied, (iii) no accumulated
funding deficiency, whether or not waived, within the meaning of Section 302 of
ERISA or Section 412 of the Code, has been incurred and (iv) all contributions
(including installments) to such plan required by Section 302 of ERISA and
Section 412 of the Code have been timely made.
(n) Neither the Company nor the Subsidiaries contributes
to or has an obligation to contribute to, and has not at any time within six
years prior to the Closing
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Date contributed to or had an obligation to contribute to, a multiemployer plan
within the meaning of Section 3(37) of ERISA.
(o) To the knowledge of the Seller, neither the Company
nor the Subsidiaries have encountered any labor union organizing activity or
had any actual or threatened employee strikes, work stoppages, slowdowns or
walkouts.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
3.1 Corporate Matters. The Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. The Buyer has all requisite corporate power and authority to
enter into this Agreement and to perform its obligations under this Agreement.
This Agreement, and all transactions contemplated hereby, have been duly
authorized and approved by all necessary corporate action on the part of the
Buyer. No further corporate action is necessary on the part of the Buyer to
execute and deliver this Agreement or to perform its obligations hereunder,
including consummation of the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Buyer and is a legal, valid and
binding obligation of the Buyer, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time in
effect that affect creditors' rights generally and by legal and equitable
limitations on the availability of specific remedies. The execution, delivery
and performance of this Agreement, the consummation of the transactions
contemplated hereby and the compliance with the provisions hereof by the Buyer
will not violate any provision of, or constitute a default under, any contract
or other agreement to which the Buyer is a party or by which it is bound, or
conflict with its Certificate of Incorporation or Bylaws, other than
violations, defaults or conflicts that would not materially and adversely
affect the ability of the Buyer to consummate the transactions provided for in
this Agreement.
3.2 Approvals and Authorizations. Other than notices given
pursuant to the HSR Act, no Order or Authorization of, or exemption by, or the
giving of notice to, or the registration with, or the taking of any other
action in respect of, any Person not a party to this Agreement, including any
Governmental Entity, and no filing, recording, publication or registration in
any public office or any other place is now, or under existing law in the
future will be, necessary on behalf of the Buyer to authorize the execution,
delivery and performance of this Agreement by the Buyer or any other agreement
contemplated hereby to be executed and delivered by the Buyer and the
consummation of the transactions contemplated hereby or thereby or to effect
the legality, validity, binding effect or enforceability thereof.
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3.3 Financing Commitments. The Buyer has delivered to the Seller
true and complete copies of the Financing Commitments. The Financing
Commitments have not been amended or modified and are in full force and effect.
3.4 Finder's Fees. Neither the Buyer nor any Affiliate of the
Buyer has employed or retained any investment banker, broker, agent, finder or
other Person, or incurred any obligation for brokerage fees, finder's fees or
commissions, with respect to the transactions contemplated by this Agreement,
or otherwise dealt with anyone purporting to act in the capacity of a finder or
broker with respect thereto whereby any party hereto may be obligated to pay
such a fee or a commission. The Buyer agrees to indemnify and hold the Seller
and its Affiliates harmless from and against any and all claims, liabilities or
obligations with respect to all fees, commissions or expenses asserted by any
Person on the basis of any act, statement, agreement or commitment alleged to
have been made by the Buyer or any Affiliate of the Buyer with respect to any
such fee, commission or expense.
ARTICLE 4
ADDITIONAL AGREEMENTS
4.1 Cooperation; Record Retention.
(a) In the event of, and for so long as any party is
contesting or defending against, any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand asserted by a third Person
(including any Governmental Entity) against or involving a party hereto in
connection with (i) any transaction contemplated by this Agreement or (ii) any
fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or transaction on or prior
to the Closing Date involving the Company and the Subsidiaries, the other party
will to the extent reasonably practicable cooperate with the contesting or
defending party and its counsel in the contest or defense, and provide such
testimony and access to its books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and expense of the
contesting or defending party (except to the extent the contesting or defending
party is entitled to indemnification therefor under Article 8 hereof).
(b) The Seller will cooperate with the Buyer, the Company
and the Subsidiaries in making claims under insurance policies relating to
automobile and general liability maintained prior to the Closing by the Seller
or Affiliates of the Seller (other than the Company or any Subsidiary) for the
benefit, in whole or in part, of the Company and the Subsidiaries with respect
to claims asserted against the Company or any Subsidiary after the Closing that
are based, in whole or in part, on events that occurred prior to the Closing.
(c) Except when a longer period is required by Law, each
party hereto shall retain and shall ensure that its Affiliates retain, for a
period of at least seven years following the Closing Date, all material
information (including all material books
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and records) relating to the Business prior to the Closing Date.
Notwithstanding the foregoing, either party hereto may offer in writing to
deliver to the other party all or a portion of such information in its
possession or that of its Affiliates and, if such offer is accepted in writing
within 90 days after receipt thereof, the offering party shall promptly arrange
for the delivery of such information to the accepting party (at the expense of
the offering party). If such offer is not so accepted, the offered information
may be destroyed or otherwise disposed of by the offering party at any time
following such 90 day period.
4.2 Employee Matters.
(a) The parties agree that the participation by the
Company and the Subsidiaries in all employee benefit plans maintained by any
other corporation, trade, business or entity under common control with the
Company or the Subsidiaries, within the meaning of Section 414(b), (c) or (m)
of the Code or Section 4001 of ERISA, shall terminate as of the Closing Date.
(b) Any employees of the Company or any Subsidiary that
remain employed with the Company, a Subsidiary or the Buyer or one of its
Affiliates immediately after the Closing Date shall be referred herein as the
"Transferred Employees".
(c) As a matter solely between the Seller and the Buyer,
the Buyer agrees that (i) the employment of all employees of the Company and
the Subsidiaries shall not be terminated by virtue of the consummation of the
transactions contemplated hereby, (ii) the rate of base salary or wages of each
Transferred Employee (other than any Transferred Employee subject to clause
(iii) of this Section 4.2(c)) will not be reduced by action of the Company or
any Subsidiary for a period of six months following the Closing Date and (iii)
if the employment of any Transferred Employee is terminated by the Company or
any such Subsidiary within six months following Closing, other than for cause,
the Company or such Subsidiary will provide to such terminated Transferred
Employee, in lieu of any severance benefit that otherwise would be available
under the severance policies of the Buyer and its Affiliates, the severance
that such Transferred Employee would have received if the Transferred Employee
had been entitled to receive severance from the Seller or any of its
Affiliates, the Company or any Subsidiary in accordance with the severance
policies (including, as applicable, the Xxxxxxxxxxx Enterra Special Severance
Payment Plan) of the Seller, the Company and the Subsidiaries previously
provided to the Buyer, without giving effect to any provisions that eliminate
the severance payment obligations as a result of a purchaser of the Company and
the Subsidiaries offering the Transferred Employee employment. With respect to
any Transferred Employee, the Buyer shall have no obligations to cause the
Company or any Subsidiary to provide such employee with any benefits other than
those that are currently provided by the Company or such Subsidiary or that are
provided by the Buyer to similarly situated employees or any combination
thereof. As of the Closing Date, the Buyer shall have no obligation hereunder
to cause the Company or any Subsidiary to continue the employment of any
Transferred Employee for a definite term or to continue or to pay any
compensation pursuant to any bonus
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or incentive plan in effect at the Company or any Subsidiary on or before the
Closing Date.
(d) In determining eligibility for and entitlement to
vacation and other normal employee benefits (excluding stock-based plans and
incentive programs) based on length of service by Transferred Employees under
the Buyer's or its Affiliates' normal policies, service with the Company or an
Affiliate of the Company shall be considered by the Buyer and its Affiliates as
service with the Buyer and its Affiliates. In determining eligibility for and
the amount of severance benefits to which the Transferred Employees may become
entitled (other than with respect to termination of employment within six
months following the Closing Date) upon termination of employment with the
Company, a Subsidiary, the Buyer or one of its Affiliates after the Closing
Date under the Buyer's (or other Affiliate that employs the Transferred
Employees) normal severance policies, service with the Company or an Affiliate
of the Company shall be considered as service with the Buyer and its
Affiliates.
(e) The Buyer agrees to provide to all Transferred
Employees the opportunity to participate in group health and other benefit
plans maintained by it or its Affiliates for similarly situated employees. The
Buyer agrees to waive all waiting periods and any pre-existing condition
limitation for all Transferred Employees under the group health plan maintained
by it or its Affiliates.
(f) The Buyer shall be fully responsible for all
liabilities related to the termination by the Buyer of the employment of any of
the Transferred Employees within 90 days after the Closing Date or such other
period that would expose the Seller to liabilities under the Worker Adjustment
and Retraining Notification Act, 29 U.S.C. Sections 2101-2109, as a result of
the premature termination by the Buyer of the employment of any of the
Transferred Employees.
(g) The Seller shall be responsible for the severance
obligations, if any, with respect to any employees who do not remain employed
with the Company, a Subsidiary or the Buyer or one of its Affiliates
immediately after the Closing Date.
(h) The Buyer and the Seller shall use their best efforts
to agree on a procedure whereby the Seller and its Affiliates will continue to
provide certain employee benefits to the Transferred Employees for a period of
time immediately following the Closing and the Buyer will reimburse and
indemnify the Seller and its Affiliates for their costs and liabilities related
thereto.
4.3 Repurchase of Uncollected Accounts Receivable.
(a) The Buyer shall cause the Company and the
Subsidiaries to use commercially reasonable efforts to collect in full,
consistent with the past practices of the Business, all accounts receivable of
the Company and the Subsidiaries outstanding as of the Closing Date (the
"Accounts Receivable"). If any Accounts Receivable shall not have been fully
collected within 150 days following the Closing Date in an amount equal to the
aggregate outstanding unpaid amounts thereof at the Closing, the Buyer shall
have the option to cause the Company or the appropriate Subsidiary for a period
of 30
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days following the expiration of such 150 day period to tender to the Seller,
and if tendered the Seller shall purchase, the unpaid portion of the Accounts
Receivable, at a purchase price equal to the aggregate original outstanding
amount of the Accounts Receivable less (i) net collections thereon from the
Closing Date to the repurchase date and (ii) the Company's consolidated reserve
for bad debts included in the Company's Closing Financial Statements; provided,
however, the Buyer may not settle or compromise any of the Accounts Receivable
without the prior written consent of the Seller.
(b) As a condition to any such repurchase, the Buyer
shall cause the Company or the appropriate Subsidiary to convey to the Seller
the unpaid Accounts Receivable to be repurchased, shall provide the Seller with
sufficient detail regarding the unpaid Accounts Receivable and shall cause the
Company or the appropriate Subsidiary to subrogate the rights to collection of
the Company or any Subsidiary. The Buyer shall represent and warrant that (i)
neither the Buyer nor the Company or any Subsidiary has transferred or conveyed
the unpaid Accounts Receivable to any other Person, (ii) the unpaid Accounts
Receivable are free and clear of any Liens and (iii) the Company or the
appropriate Subsidiary has, with respect to any funds received from the
customer that is a debtor with respect to an Account Receivable in partial
payment of any Accounts Receivable owed to the Company or such Subsidiary,
applied such funds to such Accounts Receivable in the order of age (i.e., with
the oldest being paid first), except (A) for any Disputed Account Receivable,
unless the customer directs that such funds be applied to a Disputed Account
Receivable, and (B) for any payment that is directed by the customer to be
applied to a specific Account Receivable. For purposes of this Section 4.3, a
"Disputed Account Receivable" (I) shall mean an Account Receivable as to which
the customer that is the debtor with respect thereto has communicated to the
Company or such Subsidiary, in writing, that the customer disputes the
propriety of payment of such Account Receivable, in whole or in part and (II)
shall include the Account Receivable from Xxxx Gulf Marine.
(c) The Seller shall provide to the Buyer at Closing a
list of the Disputed Accounts Receivable as of such date. If, following the
Closing, the Company or any Subsidiary shall receive written evidence of a
Disputed Account Receivable from the customer that is the debtor with respect
thereto, the Company shall provide to the Seller a copy of such written
evidence within 45 days of the Company's or such Subsidiary's receipt thereof.
(d) The Buyer agrees to act in good faith with respect to
the Seller and this Section 4.3 in communicating with the customers that are
obligated with respect to Accounts Receivable and will not encourage any such
customers to dispute any Accounts Receivable that are outstanding as of the
Closing Date or to direct payments to Accounts Receivable that become
outstanding following the Closing Date.
(e) The assignment of the unpaid Accounts Receivable
contemplated by this Section 4.3 shall be effected on the fifth Business Day
following the date of tender thereof to the Seller against payment therefor as
provided herein in immediately available funds. The Buyer shall provide to the
Seller any documents or information
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reasonably requested by the Seller in connection with the Seller's collection
of any unpaid Accounts Receivable repurchased from the Buyer.
4.4 Cooperation. The Seller and the Buyer shall each use all
commercially reasonable efforts (i) to take, or to cause to be taken, all
appropriate action, and to do, or to cause to be done, all things necessary,
proper or advisable under applicable Law or otherwise to consummate and make
effective the transactions contemplated by this Agreement, (ii) to obtain from
any Governmental Entities any Authorizations or Orders required to be obtained
by the Buyer or the Seller or any of their subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the performance of
their obligations hereunder, (iii) to make all necessary filings, and
thereafter to make promptly any other required submissions, with respect to
this Agreement required under (A) the HSR Act or (B) any other applicable Law,
Regulation or Order; provided, however, that the Buyer and the Seller shall
cooperate with each other in connection with the making of all such filings and
in supplying any information requested supplementally or by second request from
any Governmental Entity. The Buyer and the Seller shall request early
termination of the waiting period under the HSR Act with respect to the
transactions contemplated hereby.
4.5 Proprietary Information. The Seller shall retain the
Proprietary Information in strict confidence and shall not, from and after the
Closing, use or disclose the same for any purpose whatsoever, except as may be
required by Law.
4.6 Use of Corporate Names. All right, title and interest in and
to the corporate names set forth in Section 2.6(b) of the Disclosure Schedule,
or any derivations thereof, are vested in the Company or a Subsidiary. The
Seller agrees that it will not take or cause to be taken any action that could
reasonably be expected to adversely affect the right of the Company and the
Subsidiaries to the use of such names or cause confusion with respect to the
use of such names by the Company or any Subsidiary. All goodwill with respect
to the use of the names will remain with the Company and the Subsidiaries, and
the Seller will not have any rights to xxx or recover against any Person with
respect to the use of such names.
4.7 Conduct of the Business. The Seller covenants and agrees
with the Buyer that from and after the date hereof until the Closing, except as
expressly authorized by this Agreement or as expressly consented to in writing
by the Buyer, the Seller shall cause the Company and each of the Subsidiaries:
(a) to operate the Business only in the usual, regular
and ordinary course with a view to maintaining the goodwill that the Company
and the Subsidiaries now enjoy and, to the extent consistent with such
operation, will use all reasonable efforts to preserve intact their present
business organizations, keep available the services of their employees and
preserve their relationships with their customers, suppliers, jobbers,
distributors and other Persons having business relations with them;
(b) to maintain books of account and records of the
Company and each of the Subsidiaries in the usual, regular and ordinary course
and in accordance with the
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Company's and the Subsidiaries' usual accounting practices applied on a
consistent basis;
(c) to comply in all material respects with all Laws,
Orders and Regulations applicable to the Company and the Subsidiaries and to
the conduct of the Business;
(d) to preserve and maintain all Proprietary Rights and
not to sell, assign, transfer, lease or otherwise dispose of any Proprietary
Rights; and
(e) to maintain and keep the properties and assets that
are material to the Company and the Subsidiaries, taken as a whole, in as good
repair and condition as on the date of this Agreement, ordinary wear and tear
excepted, and to maintain supplies and inventories in quantities consistent
with their customary business practices.
4.8 Negative Covenants. The Seller covenants and agrees with the
Buyer that, from and after the date of this Agreement until the Closing, except
as expressly authorized by this Agreement or as expressly consented to in
writing by the Buyer, the Seller shall not permit the Company or any
Subsidiary:
(a) (i) to increase in any material respect the
compensation payable to or to become payable to any employee of the Company or
any Subsidiary, except for increases in salary or wages payable or to become
payable in the ordinary course of business and consistent with past practice;
(ii) to grant in any material respect any severance or termination pay (other
than pursuant to the normal severance policy of the Company and the
Subsidiaries as in effect on the date of this Agreement) to, or to enter into
or to amend any employment or severance agreement with, any director, officer
or employee of the Company or any Subsidiary; (iii) to establish, adopt or
enter into any new Benefit Plan; or (iv) except as required by applicable Law,
to amend any Benefit Plan or accelerate vesting with respect to any Benefit
Plan;
(b) to declare or to pay any dividend on, or to make any
other distribution in respect of, outstanding shares of capital stock or other
equity interests of the Company or any Subsidiary, except for dividends or any
other distributions by a Subsidiary to the Company;
(c) (i) to redeem, purchase or acquire, or to offer
to purchase or acquire, any outstanding shares of capital stock of, or other
equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests in
(other than any such acquisition by the Company or any Subsidiary directly from
any other Subsidiary in exchange for funds paid to such other Subsidiary), or
any outstanding options, warrants or rights of any kind to acquire any shares
of capital stock of, or other equity interests in, the Company or any
Subsidiary; (ii) to effect any recapitalization of the Company or any
Subsidiary; or (iii) to split, combine or reclassify any of the capital stock
of, or other equity interests in, the Company or any Subsidiary or issue or
authorize or propose the issuance of any other
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securities in respect of, in lieu of or in substitution for, shares of such
capital stock or such equity interests;
(d) (i) to offer, sell, issue or grant, or authorize
the offering, sale, issuance or grant, of any shares of capital stock of, or
other equity interests in, any securities convertible into or exchangeable for
any shares of capital stock of, or other equity interests in, or any options,
warrants or rights of any kind to acquire any shares of capital stock of, or
other equity interests in, the Company or any Subsidiary; or (ii) to grant any
Lien with respect to any shares of capital stock of, or other equity interests
in, a Subsidiary held by the Company;
(e) to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or in any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise to acquire any assets
of any other Person (other than the purchase of assets from suppliers or
vendors in the ordinary course of business and consistent with past practice),
in each case, that are material to the Company and the Subsidiaries, taken as a
whole;
(f) to sell, lease, exchange or otherwise dispose of, or
to grant any Lien (other than a Permitted Lien) with respect to, any of the
assets of the Company or any Subsidiary that are material to the Company and
the Subsidiaries, taken as a whole, except for dispositions of inventories and
of assets in the ordinary course of business and consistent with past practice;
(g) (i) to change any of its methods of accounting in
effect at December 31, 1996, (ii) to make or rescind any election relating to
Taxes, (iii) to settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to Taxes
(except where the cost to the Company and the Subsidiaries of such settlements
or compromises, individually or in the aggregate, does not exceed $250,000), or
(iv) to change any of its methods of reporting income or deductions for federal
income tax purposes from those employed in the preparation of the federal
income tax returns for the taxable year ended December 31, 1995, except, in
each case, as may be required by applicable Law or generally accepted
accounting principles;
(h) to incur any material Debt Obligations, other than
undiscounted, noninterest bearing, demand obligations or indebtedness to
Weatherford or an Affiliate of Weatherford;
(i) other than Permitted Liens, to pledge or otherwise
create, or suffer to exist, a security interest in any of the Shares; or
(j) to permit any insurance policy naming the Company or
a Subsidiary as a beneficiary or a loss payee to be canceled or terminated or
any of the coverage thereunder to lapse unless simultaneously with such
termination or cancellation replacement policies providing substantially the
same coverage are in full force and effect.
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4.9 Governmental Filings. As promptly as practicable after the
execution of this Agreement, the Buyer and the Seller shall, in cooperation
with the other, file any reports or notifications that may be required to be
filed by it under applicable law, including filings under the HSR Act with the
Federal Trade Commission and the Antitrust Division of the Department of
Justice, and shall furnish to the other all such information in its possession
as may be necessary for the completion of the reports or notifications to be
filed by the other.
4.10 Access to Information.
(a) Prior to the Closing, the Buyer may make such
investigation of the business and properties of the Company and the
Subsidiaries as the Buyer may desire and, upon reasonable prior notice, the
Seller shall give, or shall cause to be given, to the Buyer and its counsel,
accountants and other representatives reasonable access, during normal business
hours throughout the period prior to the Closing, to the property, books,
commitments, agreements, records, files and personnel of the Company and the
Subsidiaries, and the Seller shall furnish, or shall cause to be furnished, to
the Buyer during that period all copies of documents and information concerning
the Company and the Subsidiaries as the Buyer may reasonably request, subject
to applicable Law. The Buyer shall not disclose, and shall cause its counsel,
accountants and other agents and representatives not to disclose, such
information and documents unless such information or documents (i) already are
in the possession of the Buyer, provided that such information or documents are
not subject to a confidentiality agreement with or other obligation of secrecy
to the Company or any of its Affiliates, or (ii) become generally available to
the public through no fault of the Buyer or any of its representatives. The
Seller shall use reasonable efforts to cause the Company's auditors to make
available to the Buyer and to its authorized accountants and other
representatives access during normal business hours to the work papers prepared
by such auditors relating to the Company's Financial Statements.
(b) From and after the Closing Date, each party hereto
shall afford, and shall ensure that its Affiliates afford, to the other party
and to its authorized accountants, attorneys and other representatives
reasonable access and duplicating rights (all such duplication costs to be
borne by the requesting party) during normal business hours to all material
books and records relating to the Business as conducted prior to the Closing
Date that are within the possession or control of the officers or employees of
the former to the extent that such access is reasonably required for audit,
accounting, third party claims and litigation and tax purposes, as well as for
the purposes of fulfilling disclosure and reporting obligations; provided,
however, that such purposes shall not include competitive purposes or claims or
litigation between the parties. Notwithstanding the foregoing, the providing
party need not provide access to books and records if such access may be
reasonably deemed to result in a waiver of privilege by the providing party.
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ARTICLE 5
JOINT CONDITIONS TO THE CLOSING
The obligations of each party to this Agreement to effect the
transactions contemplated hereby to occur at the Closing shall be subject to
the satisfaction or, to the extent permitted by Law, waiver of each of the
following conditions:
5.1 Laws, Regulations and Orders. All requirements of any
applicable Law, Regulation or Order necessary for the valid consummation of the
transactions contemplated herein to occur at the Closing shall have been
fulfilled (including the termination or expiration of the applicable waiting
period under the HSR Act), and all filings required to be made with any
Governmental Entity under any applicable Law, Regulation or Order and all
Authorizations required to be obtained from any Governmental Entity under any
applicable Law, Regulation or Order, in each case, to permit the Seller or the
Buyer to consummate the transactions contemplated hereby to occur at the
Closing, shall have been made or obtained (other than any requirement the
nonfulfillment of which and any Authorization the nonreceipt of which would not
have a material adverse effect on the Seller, the Buyer or the Company and the
Subsidiaries, taken as a whole).
5.2 No Restraining Order; Absence of Certain Actions. No
temporary restraining Order, preliminary or permanent injunction or other Order
issued by any court of competent jurisdiction preventing the consummation of
the transactions contemplated hereby to occur at the Closing shall be in
effect.
5.3 Foreign Facilities Arrangements. The Buyer (or its
Affiliates) and the Seller (or its Affiliates) shall have entered into mutually
acceptable arrangements regarding the leasing on a month-to-month basis for a
period of up to six months of the facilities used by the Company or the
Subsidiaries in Djakarta, Singapore and Dubai.
ARTICLE 6
BUYER'S CONDITIONS TO CLOSING
The obligation of the Buyer to purchase the Shares as contemplated
hereby is, at the option of the Buyer, subject to the satisfaction on or before
the Closing Date of the conditions set forth below, any of which, to the extent
permitted by applicable Law, may be waived by the Buyer in writing; provided,
however, the Buyer's election to proceed with the Closing shall not be deemed a
waiver of any breach of any representation, warranty or covenant herein,
whether or not known to the Buyer or existing on the Closing Date, and such
action shall not prejudice the Buyer's right to recover damages for any such
breach.
6.1 Representations, Warranties and Covenants. The
representations and warranties of the Seller contained in this Agreement shall
be true, correct and complete in all respects on and as of the Closing Date
with the same force and effect as though
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such representations and warranties had been made or given on and as of such
date, except for any changes during the period from the date hereof until the
Closing Date required or permitted by this Agreement. Each and all of the
agreements and covenants of the Seller to be performed or complied with by it
on or before the Closing Date pursuant to this Agreement shall have been
performed or complied with in all material respects. The Seller shall have
delivered to the Buyer a certificate signed by one of the Seller's duly
authorized officers dated the Closing Date regarding the matters set forth in
this Section 6.1.
6.2 Good Standing. The Seller shall have delivered to the Buyer
certificates or other instruments, each dated as of a recent date, issued by
the Secretary of State or other appropriate authority of the jurisdictions of
incorporation of the Company and each Subsidiary incorporated in the United
States, as well as each State in which the Company or any Subsidiary
incorporated in the United States is qualified to do business as a foreign
corporation as provided in Section 2.1(a) of the Disclosure Schedule,
evidencing the good standing of each of the Company and the Subsidiaries in
each such state or jurisdiction.
6.3 Instruments of Transfer. The Seller shall have delivered to
the Buyer the certificates evidencing the Shares and shall have executed,
acknowledged and delivered to the Buyer such stock powers and other instruments
of transfer, assignment and conveyance, in form and substance mutually
agreeable, as shall be necessary to vest in the Buyer all the right, title and
interest in and to the Shares.
6.4 Financing. The Buyer shall have received such funds
contemplated by the Financing Commitments as at least equal the Closing
Payment.
6.5 Consents of Third Persons. A copy of all consents from third
Persons that are listed in Section 2.4(a) of the Disclosure Schedule shall have
been delivered to the Buyer.
6.6 Resolutions. The Buyer shall have received certified copies
of resolutions of the Board of Directors of the Seller approving this Agreement
and the transactions contemplated hereby.
6.7 Resignations. The Buyer shall have received written
resignations of each of the directors of the Company and of each wholly-owned
Subsidiary.
6.8 Corporate Records. The Seller shall have delivered, or
caused to be delivered, to the Buyer, possession of the stock registers, minute
books and corporate books and records for the Company and each of the
Subsidiaries.
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ARTICLE 7
SELLER'S CONDITIONS TO CLOSING
The obligation of the Seller to sell and deliver the Shares as
contemplated hereby is, at the option of the Seller, subject to the
satisfaction on or before the Closing Date of the conditions set forth below,
any of which, to the extent permitted by applicable Law, may be waived by the
Seller in writing; provided, however, the Seller's election to proceed with the
closing of the transactions contemplated hereby shall not be deemed a waiver of
any breach of any representation, warranty or covenant herein, whether or not
known to the Seller or existing on the Closing Date, and such action shall not
prejudice the Seller's right to recover damages for any breach.
7.1 Representations, Warranties and Covenants. The
representations and warranties of the Buyer contained in this Agreement shall
be true, correct and complete in all respects on and as of the Closing Date
with the same force and effect as though such representations and warranties
had been made or given on and as of such date. Each and all of the agreements
and covenants of the Buyer to be performed or complied with by it on or before
the Closing Date pursuant to this Agreement shall have been performed or
complied with in all material respects. The Buyer shall have delivered to the
Seller a certificate signed by one of the Buyer's duly authorized officers,
dated the Closing Date, regarding the matters set forth in this Section 7.1.
7.2 Good Standing. The Buyer shall have delivered to the Seller
a certificate, dated as of a recent date, issued by the Secretary of State of
Delaware, evidencing the good standing of the Buyer in Delaware.
7.3 Receipt of the Shares. The Seller shall have received the
Closing Payment from the Buyer and the Buyer shall have duly executed and
delivered to the Seller an instrument acknowledging receipt of the Shares in
form and substance mutually agreeable.
7.4 Resolutions. The Seller shall have received certified copies
of resolutions of the Board of Directors of the Buyer approving this Agreement
and the transactions contemplated hereby.
ARTICLE 8
INDEMNIFICATION
8.1 Survival Period. The several representations and warranties
of the parties to this Agreement shall survive the Closing Date and shall
remain in full force and effect for the period from the Closing Date through
June 30, 1999, except in the case of Section 2.10 hereof, as to which the
period of survival shall be from the Closing Date until June 30, 2000, and
except in the case of Section 2.17 hereof, as to which the period of survival
shall be from the Closing Date until one day after the expiration of the
statute of limitations (including extensions) applicable to the Taxes that are
the
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subject thereof. Each of the periods during which the representations and
warranties shall survive is referred to herein with respect to such
representations and warranties as the "Survival Period". Such representations
and warranties shall be effective with respect to any inaccuracy therein or
breach thereof (and a claim for indemnification under this Article 8 may be
made thereon) if a written notice asserting the claim shall have been duly
given in accordance with this Article 8 within the Survival Period with
respect to such matter. All covenants and agreements contained herein shall
survive without limitation. Any claim for indemnification made during the
Survival Period shall be valid and the representations and warranties relating
thereto shall remain in effect for purposes of such indemnification
notwithstanding that such claim may not be resolved within the Survival Period.
8.2 Indemnification by the Seller. Except as otherwise limited
by this Article 8, the Seller agrees to indemnify, defend and hold the Buyer,
the Company and the Subsidiaries and each of their officers, directors,
employees, agents, stockholders and controlling Persons and their respective
successors and assigns harmless from and against and in respect of Damages
actually suffered, incurred or realized by such party (collectively, "Buyer
Losses"), arising out of or resulting from or relating to any
misrepresentation, breach of warranty or breach of any covenant or agreement
made or undertaken by the Seller in this Agreement. Notwithstanding the
foregoing, the Seller shall not be liable under this Section 8.2 in respect to
a misrepresentation or breach of warranty unless and until the aggregate amount
of any Buyer Losses for which the Buyer is entitled to indemnification pursuant
to such clause from all such Persons exceeds $500,000 and then only for those
Buyer Losses that in the aggregate exceed $500,000; provided, however, that
liability for those Buyer Losses under this Section 8.2 shall not exceed the
Cash Purchase Price. For purposes of determining the Buyer's right to
indemnification for a misrepresentation or breach of warranty made by the
Seller in this Agreement, all such representations and warranties that have
been made subject to a materiality qualification, except to the extent the word
"material" is used to modify any income, asset, expense, liability, property,
obligation or insurance policy in Section 2.5, 2.6(a), 2.7(a)(iii) or 2.13,
shall be deemed to have been made without that qualification.
8.3 Indemnification by the Buyer. Except as otherwise limited by
this Article 8, the Buyer agrees to indemnify, defend and hold the Seller and
each of its officers, directors, employees, agents, stockholders and
controlling Persons and its successors and assigns harmless from and against
and in respect of Damages actually suffered, incurred or realized by such party
(collectively, "Seller Losses"), arising out of or resulting from any
misrepresentation, breach of warranty or breach of any covenant or agreement
made or undertaken by the Buyer in this Agreement.
8.4 Procedure. All claims for indemnification under this Article
8 shall be asserted and resolved as follows:
(a) An Indemnitee shall promptly give the Indemnitor
notice of any matter that an Indemnitee has determined has given or could give
rise to a right of indemnification under this Agreement, stating the amount of
the Losses, if known, and method of computation thereof, all with reasonable
particularity, and stating with
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particularity the nature of such matter. Failure to provide such notice shall
not relieve the Indemnitor from any liability that it may have under this
Article 8 except to the extent it has been materially prejudiced by such
failure or from any liability that it may have to an Indemnitee otherwise than
under this Article 8.
(b) The obligations and liabilities of an Indemnitor
under this Article 8 with respect to Losses arising from claims of any third
party that are subject to the indemnification provided for in this Article 8
("Third Party Claims") shall be governed by and contingent upon the following
additional terms and conditions: if an Indemnitee shall receive notice of any
Third Party Claim, the Indemnitee shall give the Indemnitor prompt notice of
such Third Party Claim and the Indemnitor may, at its option, assume and
control the defense of such Third Party Claim at the Indemnitor's expense and
through counsel of the Indemnitor's choice reasonably acceptable to Indemnitee.
If the Indemnitor assumes the defense against any such Third Party Claim as
provided above, the Indemnitee shall have the right to participate at its own
expense in the defense of such asserted liability, shall cooperate with the
Indemnitor in such defense and will use reasonable efforts to make available to
the Indemnitor, at the Indemnitor's expense, all witnesses, pertinent records,
materials and information in its possession or under its control relating
thereto as may be reasonably required by the Indemnitor. If the Indemnitor
does not elect to conduct the defense against any such Third Party Claim, the
Indemnitor shall pay all reasonable costs and expenses of such defense as
incurred and shall cooperate with the Indemnitee (and be entitled to
participate) in such defense and use reasonable efforts to make available to it
all such witnesses, records, materials and information in its possession or
under its control relating thereto as may be reasonably required by the
Indemnitee. No Third Party Claim may be settled without the written consent of
the Indemnitee unless such settlement includes an unconditional release of the
Indemnitee from all liability arising out of such Third Party Claim.
(c) With respect to any Buyer Loss for which the Seller
is required to indemnify and defend the Buyer pursuant to the terms of this
Agreement and that requires any removal, remedial, response, clean-up or other
corrective action on property that is owned by or under the control of the
Company or a Subsidiary ("Remedial Action") to address conditions that cause,
contribute to or are associated with such Buyer Loss, the Seller may elect to
satisfy such Buyer Loss by implementing and completing such Remedial Action.
Any Remedial Action implemented and completed by the Seller shall achieve
cleanup standards appropriate for industrial facilities, as such standards
exist under Environmental Laws at the time the Remedial Action is conducted.
However, the Seller's obligation to indemnify and defend the Buyer shall be
limited to the cost of the Remedial Action necessary to achieve cleanup
standards appropriate for industrial facilities, as such standards exist under
Environmental Laws as of the Closing Date, and the Buyer shall pay the portion
of the cost of the Remedial Action that is in excess of the cost of the
Remedial Action that would have been necessary to achieve cleanup standards
appropriate for industrial facilities, as such standards exist under
Environmental Laws as of the Closing Date. The Seller shall endeavor to plan,
design, implement and perform such Remedial Action without undue delay and in a
manner that does not unreasonably interfere with the operations and
requirements of the Business. At the request of the Company, the Seller shall
use commercially reasonable efforts to cause the Company and the Buyer
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to be listed as additional insureds under an insurance policy of either the
Seller or the remediation contractor or contractors retained by the Seller that
may provide coverage with respect to such Remedial Action, but only with
respect to liability for bodily injury or property damage arising out of the
performance of the Remedial Action. The Seller also shall provide the Buyer
with copies of all reports, plans and correspondence submitted to any
Governmental Entity with respect to such Remedial Action.
8.5 Limitation. No claim for indemnification under this Article
8 may be asserted subsequent to the applicable Survival Period; provided,
however, that any claim for indemnification under this Article 8 made during
the applicable Survival Period shall be valid notwithstanding that such claim
may not be resolved within the applicable Survival Period.
8.6 Payment. Payment of any amounts due pursuant to this Article
8 shall be due and payable within ten Business Days after notice is received by
the Indemnitor.
8.7 Failure to Pay Indemnification. If and to the extent the
Indemnitee shall make written demand upon the Indemnitor for indemnification
pursuant to this Article 8 and the Indemnitor shall refuse or fail to pay in
full within ten Business Days of such written demand the amounts demanded
pursuant hereto and in accordance herewith, then the Indemnitee may utilize any
legal or equitable remedy to collect from the Indemnitor the amount of its
Losses and the Indemnitor shall pay, in addition to the Losses, the costs and
expenses of the Indemnitee in exercising its rights under this Section 8.7.
Nothing contained herein is intended to limit or constrain the Indemnitee's
rights against the Indemnitor for indemnity, the remedies herein being
cumulative and in addition to all other rights and remedies of the Indemnitee.
8.8 Adjustment of Liability. The amount which an Indemnitee
shall be entitled to receive from an Indemnitor with respect to any
indemnifiable Losses under this Article 8 shall be net of any insurance
recovery by the Indemnitee on account of such Losses from an unaffiliated party
and net of the amount of a tax benefit actually realized by the Indemnitee on
account of such Losses.
8.9 Release. In consideration for the agreement of the Seller to
indemnify and defend the Buyer in the manner provided in this Agreement, the
Buyer, the Company and the Subsidiaries hereby release, acquit and forever
discharge the Seller and Xxxxxxxxxxx from any claim, demand or cause of action
the Buyer, the Company or any Subsidiary may have against the Seller or
Xxxxxxxxxxx (including any right of contribution or reimbursement provided
under any Environmental Law), but only to the extent that (a) such claim,
demand or cause of action relates to matters that are the subject of
indemnification under Section 8.2 hereof and (b) all such indemnification
obligations of the Seller are performed in full in accordance with the terms of
this Agreement.
8.10 Express Negligence. THE FOREGOING INDEMNITIES SET FORTH IN
THIS ARTICLE 8 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
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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.
8.11 Specific Claims. The Seller agrees that it will at the
Closing assume from the Company or the appropriate Subsidiary the specific
Third Party Claims and the potential claims referred to in Section 8.11 of the
Disclosure Schedule (the "Retained Claims") and will, at its own expense and
through counsel chosen by the Seller, have complete control of the defense of
the Retained Claims. The Buyer agrees to cause the Company and the
Subsidiaries to cooperate with the Seller in such defense and shall use
reasonable efforts to make available to the Seller, at the Seller's expense,
all witnesses, pertinent records, materials and information in their
possession, or under their control, following the Closing relating thereto as
may be reasonably required by the Seller. In addition, the Seller agrees to
indemnify, defend and hold the Buyer, the Company and the Subsidiaries and
their respective successors and assigns harmless, without regard to any of the
limitations imposed by the second sentence of Section 8.2 hereof, from and
against and in respect of Buyer Losses arising out of or resulting from or
relating to the Retained Claims.
ARTICLE 9
TERMINATION
9.1 Events of Termination. The obligation to close the
transactions contemplated by this Agreement may be terminated by:
(a) mutual agreement of the Buyer and the Seller;
(b) the Buyer, if a material default shall be made by the
Seller in the observance or in the due and timely performance by the Seller of
any agreements and covenants of the Seller herein contained, or if there shall
have been a breach by the Seller of any of the warranties and representations
of the Seller herein contained, and such default or breach has not been cured
or has not been waived within 10 days of written notice thereof;
(c) the Seller, if a material default shall be made by
the Buyer in the observance or in the due and timely performance by the Buyer
of any agreements and covenants of the Buyer herein contained, or if there
shall have been a breach by the Buyer of any of the warranties and
representations of the Buyer herein contained, and such default or breach has
not been cured or has not been waived within 10 days of written notice thereof;
or
(d) the Buyer or the Seller, provided the terminating
party has not materially breached any of its agreements, covenants,
representations or warranties, if the Closing shall not have occurred on or
before July 7, 1997.
9.2 Liability Upon Termination. If the obligation to close the
transactions contemplated by this Agreement is terminated pursuant to any
provision of this
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Article 9, then the provisions of the second sentence of Section 4.10(a) hereof
and the provisions of Section 12.2 hereof shall survive any such termination
and neither party hereto shall have any other obligations or liability to the
other party, except that nothing herein and no such termination shall relieve
(a) the Seller from liability if the Buyer terminates this Agreement pursuant
to Section 9.1(b) hereof or (b) the Buyer from liability if the Seller
terminates this Agreement pursuant to Section 9.1(c) hereof.
9.3 Notice of Termination. The parties hereto may exercise their
respective rights of termination under this Article 9 only by delivering
written notice to that effect to the other party or parties, provided, however,
that such notice must be received on or before the Closing Date.
ARTICLE 10
DEFINITIONS OF CERTAIN TERMS
In addition to terms defined elsewhere in this Agreement, the
following terms shall have the meanings assigned to them herein, unless the
context otherwise indicates, both for purposes of this Agreement and the
Disclosure Schedule:
10.1 "Accounts Receivable" shall have the meaning given such term
in Section 4.3(a) hereof.
10.2 "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. For this purpose, "control" and
its variants shall mean the ability of a Person to control the management and
policies of another Person. In the case of the Seller, the term "Affiliate"
shall not include either the Company or any Subsidiary.
10.3 "Agreement" shall mean this Stock Purchase Agreement between
the Seller and the Buyer, joined herein by Xxxxxxxxxxx for the limited purposes
set forth herein, as amended from time to time by such parties.
10.4 "Authorization" shall mean any license, permit, consent,
waiver, franchise, authorization or approval of any Person, including any
Governmental Entity.
10.5 "Benefit Plans" shall mean, any employee pension benefit plan
(whether or not insured), as defined in Section 3(2) of ERISA, any employee
welfare benefit plan (whether or not insured), as defined in Section 3(1) of
ERISA, any plans that would be employee pension benefit plans or employee
welfare benefit plans if they were subject to ERISA, such as foreign plans and
plans for directors, any stock bonus, stock ownership, stock option, stock
purchase, stock appreciation rights, phantom stock or other stock plan (whether
qualified or nonqualified) and any bonus or incentive compensation plan
currently sponsored, maintained or contributed to by the Company or any
Subsidiary for the benefit of any of the present or former directors, officers,
employees, agents, consultants or other similar representatives providing
services to or for the Company or any Subsidiary in connection with such
services; provided, however,
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that such term shall not include (a) routine employment policies and procedures
developed and applied in the ordinary course of business and consistent with
past practice, including wage, vacation, holiday and sick or other leave
policies, (b) workers compensation insurance and (c) directors and officers
liability insurance.
10.6 "Business" shall mean the businesses and operations of the
Company and the Subsidiaries relating to the design, assembly, installation and
commission of instrumentation and electrical control and safety systems and the
provision of engineering and technical services, including the testing,
maintenance and upgrade of existing instrumentation and electrical control and
safety systems.
10.7 "Business Day" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in Houston, Texas are authorized
by law to close.
10.8 "Buyer" shall have the meaning specified in the preamble.
10.9 "Buyer Losses" shall have the meaning given such term in
Section 8.2 hereof.
10.10 "Cash Purchase Price" shall mean the amount of the Closing
Payment plus the amount, if any, by which the total stockholder's equity
reflected in the Company's Closing Financial Statements (determined in
accordance with Section 1.4(a) hereof) shall exceed $17,991,000 or minus the
amount, if any, by which $17,991,000 exceeds such total stockholder's equity.
10.11 "CERCLA" shall mean the Comprehensive Environmental,
Response, Compensation and Liability Act of 1980.
10.12 "Closing" shall mean the closing of the transactions
contemplated by this Agreement.
10.13 "Closing Date" shall have the meaning given such term in
Section 1.3 hereof.
10.14 "Closing Payment" shall have the meaning given such term in
Section 1.2(a) hereof.
10.15 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or similar provisions of legislation replacing such
law from time to time.
10.16 "Commonly Controlled Entity" shall have the meaning given
such term in Section 2.18(m) hereof.
10.17 "Company" shall have the meaning given such term in the
recitals to this Agreement.
10.18 "Company's Closing Financial Statements" shall have the
meaning given such term in Section 1.4(a) hereof.
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10.19 "Company's Financial Statements" shall mean the unaudited
consolidated balance sheet of the Company and the Subsidiaries as of December
31, 1996, and the related consolidated statements of income, cash flows and
changes in stockholder's equity for the year ended December 31, 1996, together
with the notes thereto.
10.20 "Contracts and Other Agreements" shall mean all executory
contracts, agreements, understandings, indentures, notes, bonds, loans,
instruments, leases, mortgages, franchises, licenses, commitments or binding
arrangements, whether express or implied, oral or written, to which the Company
or any Subsidiary is a party or bound or to which their properties or assets
are subject.
10.21 "Damages" shall mean any and all liabilities, losses,
damages, demands, assessments, claims, costs and expenses (including interest,
awards, judgments, penalties, settlements, fines, costs of remediation,
diminutions in value, costs and expenses incurred in connection with
investigating and defending any claims or causes of action (including
attorneys' fees and expenses and all fees and expenses of consultants and other
professionals)).
10.22 "Debt Obligations" shall mean any note, bond, debenture,
purchase money obligation or capitalized lease obligation, any contract,
agreement, indenture or other instrument relating to the borrowing of money,
any obligation in support of any letter of credit, performance bond or similar
undertaking issued by a third party or any guarantee, suretyship agreement or
other contingent liability in respect of any indebtedness or obligation of any
Person (other than the endorsement of negotiable instruments for deposit or
collection in the ordinary course of business). Such term shall not include
trade accounts payable incurred in the ordinary course of business conducted in
accordance with past practice.
10.23 "Disclosure Schedule" shall mean the disclosure schedule
delivered to the Buyer.
10.24 "Disputed Account Receivable" shall have the meaning given
such term in Section 4.3(b) hereof.
10.25 "Environmental Laws" shall mean any and all laws, statutes,
ordinances, rules, regulations or final and nonappealable orders of any
governmental authority pertaining to the environment in effect as of the
Closing Date and applicable to the Company or any of the Subsidiaries,
including the Clean Air Act, CERCLA, the Federal Water Pollution Control Act,
the Resource Conservation and Recovery Act of 1976, the Safe Drinking Water
Act, the Toxic Substances Control Act, the Hazardous & Solid Waste Amendments
Act of 1984, the Superfund Amendments and Reauthorization Act of 1986, the
Hazardous Materials Transportation Act, the Oil Pollution Act of 1990, any
state or local Laws implementing the foregoing federal Laws, and any state Laws
pertaining to the handling of oil and gas exploration and production wastes or
the use, maintenance and closure of pits and impoundments, and all other
environmental conservation or protection Laws. "Environmental Laws" does not
include the Occupational Safety and Health Act or any other federal, state or
local Law, statute, ordinance, regulation or order governing worker safety or
workplace conditions.
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10.26 "Environmental Permit" shall mean any permit, license,
approval, registration, identification number or other authorization with
respect to the Business under any applicable Environmental Law.
10.27 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time.
10.28 "Final Statement" shall have the meaning given such term in
Section 1.4(a) hereof.
10.29 "Financing Commitments" shall mean (i) that certain
commitment to lend the Company funds dated May 5, 1997 issued by Texas Commerce
Bank National Association and Chase Securities, Inc. for and on behalf of the
Company and (ii) that certain commitment dated May 7, 1997 issued by an
Affiliate of the Buyer to invest funds in the equity of the Buyer, which
commitments together will provide funds at least equal to the Closing Payment.
10.30 "Governmental Entity" shall mean any arbitrator, court,
administrative or regulatory agency, commission, department, board or bureau or
body or other government or authority or instrumentality or any entity or
Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
10.31 "Hazardous Materials" shall mean any (a) petroleum or
petroleum products, (b) hazardous substances as defined by Section 101(14) of
CERCLA and (c) any other chemical, substance or waste that is regulated by any
Governmental Entity under any Environmental Law.
10.32 "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976.
10.33 The term "including" shall mean including without limitation.
10.34 "Indemnitee" shall mean the Person or Persons indemnified or
entitled, or claiming to be entitled to be indemnified, pursuant to the
provisions of Section 8.2 or Section 8.3 hereof, as the case may be.
10.35 "Indemnitor" shall mean the Person or Persons having the
obligation to indemnify pursuant to the provisions of Section 8.2 or Section
8.3 hereof, as the case may be.
10.36 "Intercompany Payable" shall have the meaning given such term
in Section 1.2(e) hereof.
10.37 "Intercompany Receivable" shall have the meaning given such
term in Section 1.2(e) hereof.
10.38 "IRS" shall mean the Internal Revenue Service.
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10.39 The term "knowledge" shall mean, when used with respect to
the Seller, the actual, present knowledge of Xxxxxx Xxxxxx, Xxxxx Xxxx and
Xxxxxxx Xxxxxx, after each such person has been involved in the due diligence
review described in Annex B.
10.40 "Law" shall mean any law, statute or ordinance of the United
States of America or any political subdivision thereof, any foreign country or
any domestic or foreign state, province, commonwealth, city, country,
municipality, territory, protectorate, possession or similar instrumentality.
10.41 "Lien" shall mean any lien, pledge, adverse claim, charge,
security interest, constructive trust or other encumbrance, option, defect or
other rights of any third Person of any nature whatsoever.
10.42 "Losses" shall mean Seller Losses or Buyer Losses, as the
case may be.
10.43 "Material Adverse Effect" 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 the Business, would
have, or might reasonably be expected to have, a material adverse effect on the
assets, liabilities (absolute or contingent), results of operations, condition
(financial and other) or business of the Company and the Subsidiaries, taken as
a whole.
10.44 "Order" shall mean any judgment, order or decree of any
Governmental Entity, including any court or arbitration tribunal.
10.45 "Permitted Liens" shall mean (a) Liens securing or relating
to liabilities or obligations of the Company or any Subsidiary that are
disclosed in the Company's Financial Statements, (b) Liens for current taxes
and assessments not yet due, (c) inchoate mechanic and materialmen Liens for
construction in progress, (d) inchoate workmen, repairmen, warehousemen and
carriers' Liens arising in the ordinary course of business, (e) Liens created by
the Buyer and (f) such Liens and imperfections of title with respect to real
property owned in fee simple by the Company or any Subsidiary as would not have
a Material Adverse Effect.
10.46 "Person" shall mean a corporation, an association, a
partnership, an organization, a business, an individual or a Governmental
Entity.
10.47 "Proprietary Information" shall mean collectively (a)
Proprietary Rights and (b) any and all other information and material
proprietary to the Company and the Subsidiaries, owned, possessed or used by
the Company and the Subsidiaries, whether or not such information is embodied
in writing or other physical form, and which is not generally known to the
public, that (i) relate to financial information regarding the Company or any
of the Subsidiaries, including (A) business plans and (B) sales, financing,
pricing and marketing procedures or methods of the Company and the Subsidiaries
or (ii) relate to specific business matters concerning the Company and the
Subsidiaries, including the identity of or other information regarding sales
personnel or customers of the Company and the Subsidiaries.
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10.48 "Proprietary Rights" means all patents, inventions, shop
rights, know how, trade secrets, designs, plans, manuals, computer software,
specifications, confidentiality agreements, confidential information and other
proprietary technology and similar information; all registered and unregistered
trademarks, service marks, logos, trade and corporate names (including the
names "Total Engineering Services Team", "Test", "Test International" and
"Nana" and all derivations thereof) and all other trademark rights; all
registered and unregistered copyrights; and all registrations for, and
applications for registration of, any of the foregoing, that are used in the
conduct of the Business.
10.49 "Regulation" shall mean any rule or regulation of any
Governmental Entity having the effect of law in the jurisdiction in which such
Governmental Entity is located.
10.50 "Remedial Action" shall have the meaning given such term in
Section 8.4(c) hereof.
10.51 "Retained Claims" shall have the meaning given such term in
Section 8.11 hereof.
10.52 "Seller" shall have the meaning specified in the preamble.
10.53 "Seller Losses" shall have the meaning given such term in
Section 8.3 hereof.
10.54 "Seller's Portion" shall have the meaning given such term in
Section 11.2 hereof.
10.55 "Shares" shall have the meaning given such term in Section
1.1 hereof.
10.56 "Subsidiaries" shall mean Test International E.C., Nana Test,
Inc., Test International, TEST, Inc. and Test Saudi Arabia Ltd. and
"Subsidiary" shall mean any of them.
10.57 "Survival Period" shall have the meaning given such term in
Section 8.1 hereof.
10.58 "Taxes" shall mean all federal, state, local, foreign and
other taxes, charges, fees, duties, levies, imposts, customs or other
assessments, including all net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, profit share, license, lease,
service, service use, value added, withholding, payroll, employment, excise,
estimated, severance, stamp, occupation, premium, property, windfall profits,
or other taxes, fees, assessments, customs, duties, levies, imposts, or charges
of any kind whatsoever, together with any interest, penalties, additions to
tax, fines or other additional amounts imposed thereon or related thereto, and
the term "Tax" means any one of the foregoing Taxes.
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10.59 "Tax Items" shall have the meaning given such term in
Section 11.1(a) hereof.
10.60 "Tax Returns" shall have the meaning given such term in
Section 2.17 hereof.
10.61 "Terminated Benefit Plans" shall mean Benefit Plans that were
sponsored, maintained or contributed to by the Company or any Subsidiary within
six years prior to the date of this Agreement but that have been terminated
prior to the date of this Agreement.
10.62 "Third Party Claims" shall have the meaning given such term
in Section 8.4(b) hereof.
10.63 "Transferred Employees" shall have the meaning given such
term in Section 4.2(b) hereof.
10.64 "Xxxxxxxxxxx" shall have the meaning specified in the
preamble.
ARTICLE 11
TAX MATTERS
11.1 Tax Returns for Pre-Closing Periods.
(a) The Seller shall cause to be included in the
consolidated federal income Tax Returns (and the state income Tax Returns of
any state that permits consolidated, combined or unitary income Tax Returns, if
any) of the affiliated group of corporations filing a consolidated income Tax
Return of which the Seller is a member for all periods ending on or before the
Closing Date, all items of income, gain, loss, deduction and credit and other
tax items ("Tax Items") of the Company and each Subsidiary that are required to
be included therein, shall cause such Tax Returns to be timely filed with the
appropriate taxing authorities and shall be responsible for the timely payment
(and entitled to any refund) of all Taxes due with respect to the periods
covered by such Tax Returns.
(b) With respect to any Tax Return covering a taxable
period ending on or before the Closing Date that is required to be filed after
the Closing Date with respect to the Company or any Subsidiary that is not
described in Section 11.1(a) hereof, the Seller shall cause such Tax Return to
be prepared, shall cause to be included in such Tax Return all Tax Items
required to be included therein, shall cause such Tax Return to be filed timely
with the appropriate taxing authority and shall be responsible for the timely
payment (and entitled to any refund) of all Taxes due with respect to the
period covered by such Tax Return.
11.2 Tax Returns for Post-Closing Periods. With respect to any
Tax Return covering a taxable period beginning on or before the Closing Date
and ending after the
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Closing Date that is required to be filed after the Closing Date with respect
to the Company or any Subsidiary, the Buyer shall cause such Tax Return to be
prepared, shall cause to be included in such Tax Return all Tax Items required
to be included therein, shall furnish a copy of such Tax Return to the Seller,
shall file timely such Tax Return with the appropriate taxing authority and
shall be responsible for the timely payment (and be entitled to any refund) of
all Taxes due with respect to the period covered by such Tax Return. The Buyer
shall determine (by an interim closing of the books as of the Closing Date
except for ad valorem Taxes, which shall be prorated on a daily basis) the
portion of the Tax due with respect to the period covered by such Tax Return
that is attributable to the portion of such taxable period ending on the
Closing Date (the "Seller's Portion") and shall notify the Seller in writing of
its determination of the Seller's Portion. The Buyer shall provide the Seller
access to copies of all work papers and other relevant documents to verify the
Seller's computations with regard to the determination of the Seller's Portion.
The Seller shall have a period of 15 calendar days after delivery to it of such
written notification to review it and make any objections the Seller may have
in writing to the Buyer. If written objections to the determination of the
Seller's Portion are delivered to the Buyer within such 15 day period, then the
Buyer and the Seller shall attempt to resolve the matter or matters in dispute.
If no written objections are made within the time period provided above, the
Seller shall pay to the Buyer an amount equal to the Seller's Portion not later
than five Business Days after the end of such 15 day period. If the Buyer and
the Seller cannot agree on the computation, the matter shall become subject to
the provisions of Section 1.4(b) hereof.
11.3 Allocation of Franchise Taxes. Notwithstanding anything to
the contrary herein, any franchise Tax paid or payable with respect to the
Company or any Subsidiary shall be allocated to the taxable period during which
the income, operations, assets or capital comprising the base of such Tax is
measured, regardless of whether the right to do business for another taxable
period is obtained by the payment of such Tax. With respect to any franchise
Tax so allocated to the taxable period in which the Closing Date occurs: (i)
the amount of such franchise Tax shall be prorated on a daily basis between the
portion of such taxable period ending on the Closing Date and the remaining
portion of such taxable period and (ii) if the amount of such franchise Tax
paid as of the Closing Date exceeds the amount so prorated to the portion of
such taxable period ending on the Closing Date, the excess shall constitute a
purchase price adjustment in favor of the Seller for purposes of determining
the purchase price adjustment pursuant to Section 1.4 hereof.
11.4 Preparation of Tax Returns. Any Tax Return to be prepared
pursuant to the provisions of this Article 11 shall be prepared in a manner
consistent with practices followed in prior years with respect to similar Tax
Returns, except for changes required by changes in Law or fact.
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ARTICLE 12
MISCELLANEOUS
12.1 Public Announcements. Subject to applicable securities law
or stock exchange requirements, neither the Buyer nor the Seller shall, without
the prior approval of the other party, issue, or permit any of their respective
partners, directors, officers, employees, agents or Affiliates to issue, any
press release or other public announcement with respect to this Agreement or
the transactions contemplated hereby.
12.2 Expenses. Except as otherwise set forth herein, and whether
or not the transactions contemplated by this Agreement shall be consummated,
each party agrees to pay, without right of reimbursement from any other party,
the costs incurred by such party incident to the preparation and execution of
this Agreement and performance of its obligations hereunder, including the fees
and disbursements of legal counsel, accountants and consultants employed by
such party in connection with the transactions contemplated by this Agreement.
12.3 Notices. All notices, requests, consents, directions and
other instruments and communications required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been duly given
if delivered in person, by courier, by overnight delivery service with proof of
delivery or by prepaid registered or certified United States first-class mail,
return receipt requested, addressed to the respective party at the address set
forth below, or if sent by facsimile or other similar form of communication
(with receipt confirmed) to the respective party at the facsimile number set
forth below:
If to the Seller, to:
Enterra Petroleum Equipment Group, Inc.
0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: H. Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Copies to:
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
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If to the Buyer, to:
National Tank Company
0000 X. Xxxx X., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Copies to:
Xxxxxx & Xxxxxx L.L.P.
First City Tower
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx III
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
or to such other address or facsimile number and to the attention of such other
Person(s) as either party may designate by written notice. Any notice mailed
shall be deemed to have been given and received on the third Business Day
following the day of mailing.
12.4 Successors. This Agreement shall inure to the benefit of and
be binding upon the Buyer and the Seller and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights, interest or
obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties hereto.
12.5 Entire Agreement. This Agreement and the annexes hereto and
the Disclosure Schedule constitute the entire agreement and understanding
between the parties relating to the subject matter hereof and thereof and
supersedes all prior representations, endorsements, promises, agreements,
memoranda, communications, negotiations, discussions, understandings and
arrangements, whether oral, written or inferred, between the parties relating
to the subject matter hereof. This Agreement may not be modified, amended,
rescinded, canceled, altered or supplemented, in whole or in part, except upon
the execution and delivery of a written instrument executed by a duly
authorized representative of each of the parties hereto.
12.6 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas
without giving effect to choice of law principles.
12.7 Waiver. The waiver of any breach of any term or condition of
this Agreement shall not be deemed to constitute the waiver of any other breach
of the same or any other term or condition.
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12.8 Severability. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.9 No Third Party Beneficiaries. Any agreement contained,
expressed or implied in this Agreement shall be only for the benefit of the
parties hereto and the Indemnitees and their respective legal representatives,
successors and assigns, and such agreements shall not inure to the benefit of
any employees of the Company or any Subsidiary (except in their capacity as
Indemnitees) or the obligees of any indebtedness of any party hereto, it being
the intention of the parties hereto that no Person shall be deemed a third
party beneficiary of this Agreement, except to the extent a third party is
expressly given rights herein.
12.10 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.11 Headings. The headings of the Articles and Sections of this
Agreement have been inserted for convenience of reference only and shall in no
way restrict or otherwise modify any of the terms or provisions hereof or
affect in any way the meaning or interpretation of this Agreement.
12.12 Negotiated Transaction. The provisions of this Agreement
were negotiated by the parties hereto, and this Agreement shall be deemed to
have been drafted by all of the parties hereto.
ARTICLE 13
JOINDER
Xxxxxxxxxxx hereby joins in this Agreement for the limited purpose of
guaranteeing, and does hereby guarantee, the performance by the Seller in
accordance with its terms of each and every obligation of the Seller hereunder.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
SELLER:
ENTERRA PETROLEUM EQUIPMENT GROUP, INC.
By:
-------------------------------------
H. Xxxxxxx Xxxxxx
Senior Vice President and Secretary
BUYER:
NATIONAL TANK COMPANY
By:
-------------------------------------
Xxxxxxx X. Xxxxxx III
Senior Vice President
XXXXXXXXXXX ENTERRA, INC.
(which joins in this Agreement for the
limited purposes set forth in
Article 13 hereof)
By:
-------------------------------------
H. Xxxxxxx Xxxxxx
Senior Vice President,
General Counsel and Secretary
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