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EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
dated as of
October 23, 2000
among
WEATHERFORD INTERNATIONAL, INC.,
WEUS HOLDING, INC.,
ENTERRA COMPRESSION COMPANY,
UNIVERSAL COMPRESSION HOLDINGS, INC.,
AND
UNIVERSAL COMPRESSION, INC.
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TABLE OF CONTENTS
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ARTICLE I The Merger.............................................................................2
SECTION 1.1 MERGER.........................................................................2
SECTION 1.2 CONVERSION OF SHARES...........................................................2
SECTION 1.3 TREATMENT OF OPTIONS...........................................................2
SECTION 1.4 SURRENDER AND PAYMENT..........................................................2
SECTION 1.5 LOST CERTIFICATES..............................................................3
SECTION 1.6 ADJUSTMENTS....................................................................3
ARTICLE II The Surviving Corporation.............................................................3
SECTION 2.1 ARTICLES OF INCORPORATION......................................................3
SECTION 2.2 BYLAWS.........................................................................3
SECTION 2.3 DIRECTORS AND OFFICERS.........................................................3
ARTICLE III Representations and Warranties of Weatherford, WEUS and the Company..................4
SECTION 3.1 ORGANIZATION AND QUALIFICATION.................................................4
SECTION 3.2 CAPITALIZATION.................................................................4
SECTION 3.3 AUTHORIZATION..................................................................5
SECTION 3.4 CONSENTS AND APPROVALS; NO VIOLATION...........................................6
SECTION 3.5 FINANCIAL STATEMENTS...........................................................7
SECTION 3.6 UNDISCLOSED LIABILITIES........................................................7
SECTION 3.7 CONDUCT OF THE BUSINESS SINCE PARTNERSHIP UNAUDITED BALANCE SHEET DATE.........7
SECTION 3.8 LITIGATION; ORDERS.............................................................8
SECTION 3.9 LICENSES; APPROVALS............................................................8
SECTION 3.10 LABOR MATTERS..................................................................9
SECTION 3.11 COMPLIANCE WITH LAWS...........................................................9
SECTION 3.12 INSURANCE......................................................................9
SECTION 3.13 MATERIAL CONTRACTS.............................................................9
SECTION 3.14 ENVIRONMENTAL MATTERS.........................................................11
SECTION 3.15 TAXES.........................................................................12
SECTION 3.16 EMPLOYEE BENEFIT PLANS........................................................14
SECTION 3.17 BROKERAGE FEES AND COMMISSIONS................................................16
SECTION 3.18 TAX TREATMENT.................................................................16
SECTION 3.19 PROXY STATEMENT...............................................................16
SECTION 3.20 NO EXCESS PARACHUTE PAYMENTS..................................................16
SECTION 3.21 CERTAIN BUSINESS RELATIONSHIPS WITH AFFILIATES................................16
SECTION 3.22 TITLE; ASSETS.................................................................16
SECTION 3.23 OWNERSHIP OF PARENT COMMON STOCK..............................................17
ARTICLE IV Representations and Warranties of Parent and Merger Subsidiary.......................17
SECTION 4.1 ORGANIZATION AND QUALIFICATION................................................17
SECTION 4.2 CAPITALIZATION................................................................17
SECTION 4.3 AUTHORIZATION.................................................................19
SECTION 4.4 CONSENTS AND APPROVAL; NO VIOLATION...........................................19
SECTION 4.5 SEC FILINGS...................................................................20
SECTION 4.6 FINANCIAL STATEMENTS..........................................................20
SECTION 4.7 UNDISCLOSED LIABILITIES.......................................................21
SECTION 4.8 CONDUCT OF THE BUSINESS SINCE PARENT UNAUDITED BALANCE SHEET DATE.............21
SECTION 4.9 LITIGATION; ORDERS............................................................21
SECTION 4.10 LICENSES; APPROVALS...........................................................21
SECTION 4.11 LABOR MATTERS.................................................................22
SECTION 4.12 COMPLIANCE WITH LAWS..........................................................22
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SECTION 4.13 MATERIAL CONTRACTS............................................................22
SECTION 4.14 ENVIRONMENTAL MATTERS.........................................................24
SECTION 4.15 TAXES.........................................................................25
SECTION 4.16 EMPLOYEE BENEFIT PLANS........................................................26
SECTION 4.17 TAX TREATMENT.................................................................27
SECTION 4.18 PROXY STATEMENT...............................................................27
SECTION 4.19 PARENT STOCKHOLDERS' APPROVAL.................................................28
SECTION 4.20 OPINION OF FINANCIAL ADVISOR; BOARD FINDINGS AND RECOMMENDATIONS..............28
SECTION 4.21 BROKERAGE FEES AND COMMISSIONS................................................28
SECTION 4.22 INAPPLICABILITY OF DGCL SECTION 203...........................................28
SECTION 4.23 NO EXCESS PARACHUTE PAYMENTS..................................................29
SECTION 4.24 CERTAIN BUSINESS RELATIONSHIPS WITH AFFILIATES................................29
SECTION 4.25 TITLE; ASSETS.................................................................29
ARTICLE V Covenants of Weatherford, WEUS, and the Company.......................................29
SECTION 5.1 CONDUCT OF BUSINESS...........................................................29
SECTION 5.2 COMPRESSOR UNITS..............................................................32
SECTION 5.3 PRE-CLOSING TRANSFERS AND RESIGNATIONS........................................32
SECTION 5.4 RESTRICTED STOCK..............................................................33
ARTICLE VI Covenants of Parent and Merger Subsidiary............................................33
SECTION 6.1 CONDUCT OF BUSINESS...........................................................33
SECTION 6.2 PROXY STATEMENT...............................................................35
SECTION 6.3 PARENT STOCKHOLDERS' APPROVALS................................................35
SECTION 6.4 STOCK EXCHANGE LISTING........................................................35
SECTION 6.5 EMPLOYEE BENEFITS.............................................................35
SECTION 6.6 CORPORATE NAME; TRADEMARK RIGHTS..............................................38
SECTION 6.7 REGISTRATION RIGHTS AGREEMENT.................................................38
SECTION 6.8 TRANSITIONAL SERVICES AGREEMENT AND VOTING AGREEMENT..........................38
SECTION 6.9 REPRESENTATION ON PARENT'S BOARD OF DIRECTORS.................................39
SECTION 6.10 RETENTION BY WEUS.............................................................39
SECTION 6.11 RECORD PRESERVATION BY PARENT AND SURVIVING CORPORATION.......................39
SECTION 6.12 MERGER SUBSIDIARY.............................................................40
SECTION 6.13 NO SOLICITATION...............................................................40
SECTION 6.14 PARENT FINANCIAL STATEMENTS...................................................42
ARTICLE VII Covenants of Parent and the Company.................................................42
SECTION 7.1 REASONABLE BEST EFFORTS.......................................................42
SECTION 7.2 CERTAIN FILINGS...............................................................42
SECTION 7.3 PUBLIC ANNOUNCEMENTS..........................................................43
SECTION 7.4 FURTHER ASSURANCES............................................................43
SECTION 7.5 NOTICES OF CERTAIN EVENTS.....................................................44
SECTION 7.6 TAX-FREE REORGANIZATION.......................................................44
SECTION 7.7 ACCESS TO INFORMATION; CONFIDENTIALITY........................................44
SECTION 7.8 PROXY STATEMENT...............................................................46
SECTION 7.9 COOPERATION AFTER THE EFFECTIVE TIME..........................................46
SECTION 7.10 NON-SOLICITATION OF EMPLOYEES.................................................46
ARTICLE VIII Conditions to the Merger...........................................................47
SECTION 8.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY...................................47
SECTION 8.2 CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUBSIDIARY.................48
SECTION 8.3 CONDITIONS TO THE OBLIGATIONS OF WEATHERFORD, WEUS, AND THE COMPANY...........49
ARTICLE IX Termination..........................................................................50
SECTION 9.1 TERMINATION...................................................................50
SECTION 9.2 EFFECT OF TERMINATION.........................................................51
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ARTICLE X Indemnification.......................................................................51
SECTION 10.1 INDEMNIFICATION...............................................................51
SECTION 10.2 DEFENSE OF CLAIMS.............................................................53
ARTICLE XI Tax Matters..........................................................................55
SECTION 11.1 TAX RETURN PREPARATION........................................................55
SECTION 11.2 TRANSFER TAXES................................................................56
SECTION 11.3 USE OF CONSISTENT TAX PRACTICES...............................................56
SECTION 11.4 REFUNDS OR CREDITS............................................................56
SECTION 11.5 FILING OF AMENDED RETURNS.....................................................56
SECTION 11.6 ASSISTANCE AND COOPERATION....................................................57
SECTION 11.7 CLOSING TAX CERTIFICATE.......................................................57
SECTION 11.8 TAX ALLOCATION - WEUS'S OBLIGATIONS...........................................57
SECTION 11.9 TAXES OF OTHER PERSONS........................................................58
SECTION 11.10 TAX ALLOCATION - PARENT'S OBLIGATIONS.........................................58
SECTION 11.11 TAX CLAIM NOTICES.............................................................58
SECTION 11.12 PRE-CLOSING TAX PERIOD TAX CLAIMS.............................................58
SECTION 11.13 SURVIVAL AND TIME LIMITATION..................................................58
SECTION 11.14 SOLE AND EXCLUSIVE REMEDY.....................................................59
ARTICLE XII Miscellaneous.......................................................................59
SECTION 12.1 REPRESENTATIONS, WARRANTIES AND AGREEMENTS....................................59
SECTION 12.2 GOVERNING LAW.................................................................59
SECTION 12.3 ENTIRE AGREEMENT..............................................................59
SECTION 12.4 EXPENSES AND FEES.............................................................59
SECTION 12.5 NOTICES.......................................................................60
SECTION 12.6 SUCCESSORS AND ASSIGNS........................................................61
SECTION 12.7 HEADINGS; DEFINITIONS.........................................................61
SECTION 12.8 AMENDMENTS AND WAIVERS........................................................61
SECTION 12.9 CONSTRUCTION OF CERTAIN PROVISIONS............................................61
SECTION 12.10 AGREEMENT FOR THE PARTIES' BENEFIT............................................62
SECTION 12.11 SEVERABILITY..................................................................62
SECTION 12.12 JURISDICTION..................................................................62
SECTION 12.13 WAIVER OF JURY TRIAL..........................................................62
SECTION 12.14 SPECIFIC PERFORMANCE..........................................................62
SECTION 12.15 PAYMENTS CONSTITUTE LIQUIDATED DAMAGES........................................62
SECTION 12.16 COUNTERPARTS; EFFECTIVENESS...................................................63
SECTION 12.17 DEFINITIONS AND USAGE.........................................................63
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EXHIBITS AND SCHEDULES
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Exhibit A Form of Stockholders' Agreement
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Transitional Services Agreement
Exhibit D Representations of Officers of Parent
Exhibit E Representations of Officers of the Company
Exhibit F Acknowledgment
Exhibit G Form of Voting Agreement
COMPANY DISCLOSURE LETTER
Schedule I Permitted Encumbrances
Schedule 1.3 Employee Options
Schedule 3.2(a) Liens on Company Shares
Schedule 3.2(b) Ownership Structure; Encumbrances and Limitations on Non-Assessability
Schedule 3.4 Company Consents and Approvals; No Violation
Schedule 3.5 Company Financial Statements
Schedule 3.6 Company Undisclosed Liabilities
Schedule 3.7 Conduct of Business
Schedule 3.8 Company Litigation; Orders
Schedule 3.9 Licenses; Approvals
Schedule 3.10 Labor Matters
Schedule 3.11 Compliance with Laws
Schedule 3.12 Company Insurance
Schedule 3.13 Company Material Contracts
Schedule 3.14 Environmental Matters
Schedule 3.15 Company Taxes
Schedule 3.16 Company Employee Benefit Plans
Schedule 3.20 Excess Parachute Payments
Schedule 3.21 Business Relationships With Affiliates
Schedule 3.22 Title; Assets
Schedule 5.1 Conduct of Business
Schedule 5.3 Pre-Closing Transfers
PARENT DISCLOSURE LETTER
Schedule 4.2(a) Capitalization and Parent Benefit Plans
Schedule 4.2(b) Subsidiaries of Parent
Schedule 4.2(c) Parent Options
Schedule 4.4 Parent Consents and Approvals; No Violation
Schedule 4.8 Conduct of Business
Schedule 4.9 Parent Litigation; Orders
Schedule 4.10 Licenses; Approvals
Schedule 4.12 Compliance with Laws
Schedule 4.13 Parent Material Contracts
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Schedule 4.14 Parent Environmental Matters
Schedule 4.15 Parent Taxes
Schedule 4.16 Parent Employee Benefit Plans
Schedule 4.24 Certain Business Relationships with Affiliates
Schedule 4.25 Title; Assets
Schedule 6.1 Conduct of Business
Schedule 7.11 (in definition of "Adjusted Payment")
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of October
23, 2000 among Enterra Compression Company, a Delaware corporation (the
"Company"), WEUS Holding, Inc., a Delaware corporation and a stockholder of the
Company ("WEUS"), Weatherford International, Inc., a Delaware corporation and
the parent of WEUS ("Weatherford"), Universal Compression Holdings, Inc., a
Delaware corporation ("Parent"), and Universal Compression, Inc., a Texas
corporation and a direct wholly owned subsidiary of Parent ("Merger
Subsidiary").
RECITALS:
WHEREAS, concurrently with the execution of this Agreement,
the Company has entered into a Purchase Agreement (the "GC Agreement"), a copy
of which has been delivered to Parent, pursuant to which, on the terms and
subject to the conditions set forth therein, the Company will acquire from
Global Compression Services, Inc., a Delaware corporation ("GC"), the common
shares owned by GC in Weatherford Global Compression Services Ltd., a
corporation organized under the laws of Alberta, Canada ("Canada"), and the
partnership and membership interests owned by GC in the Partnership (as defined
in Section 12.17) and the General Partner (as defined in Section 12.17);
WHEREAS, the Boards of Directors of WEUS, the Company, Parent,
and Merger Subsidiary have determined that the merger of the Company with and
into Merger Subsidiary is in the best interests of their respective
stockholders;
WHEREAS, the consideration to be paid in the Merger (as
defined herein) will consist of shares of common stock, par value $0.01 per
share, of Parent ("Parent Common Stock");
WHEREAS, by consummation of the transactions contemplated by
the Merger, the Partnership (as defined in Section 12.17) will become an
indirect wholly owned subsidiary of Parent;
WHEREAS, as a condition to Weatherford's, WEUS's, and the
Company's willingness to enter into this Agreement, Weatherford, WEUS, and the
Company have required that certain stockholders of Parent enter into a
Stockholder Agreement substantially in the form of Exhibit A hereto (the
"Stockholders' Agreement"); and
WHEREAS, Weatherford, WEUS, and Parent intend the Merger to
qualify as a tax-free reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
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ARTICLE I
The Merger
Section 1.1 Merger. (a) Upon the terms and subject to the conditions
hereof, at the Effective Time (as hereinafter defined), the Company shall be
merged (the "Merger") with and into Merger Subsidiary in accordance with the
General Corporation Law of the State of Delaware (the "DGCL") and the Texas
Business Corporation Act (the "TBCA"), whereupon the separate existence of the
Company shall cease, and Merger Subsidiary shall be the surviving corporation
(the "Surviving Corporation").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger set forth herein,
the Company and Merger Subsidiary will file a certificate of merger (the
"Certificate of Merger") with the Delaware Secretary of State and articles of
merger with the Texas Secretary of State and make all other filings or
recordings required by the DGCL and the TBCA in connection with the Merger. The
Merger shall become effective at such time (the "Effective Time") as the
Certificate of Merger is duly filed with the Delaware Secretary of State (or at
such later time as may be agreed in writing by the parties hereto and specified
in the Certificate of Merger).
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, assets, powers, privileges, and franchises and,
except as otherwise provided herein, be subject to all of the obligations,
liabilities, restrictions, and disabilities of the Company and Merger
Subsidiary, all as provided under the DGCL.
Section 1.2 Conversion of Shares. At the Effective Time:
(a) the shares of common stock, par value $1.00 per share, of the
Company ("Company Common Stock") outstanding immediately prior to the Effective
Time shall be converted into the right to receive, without interest, a total of
13,750,000 shares of Parent Common Stock, subject to adjustment as provided in
Section 1.5 (the "Merger Consideration"); and
(b) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights, powers,
and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
Section 1.3 Surrender and Payment. At the Effective Time, WEUS, as the
sole stockholder of the Company, will deliver to Parent certificates (the
"Certificates") representing all of the outstanding shares of Company Common
Stock, and Parent will deliver, in exchange therefor, certificates representing
the Merger Consideration.
Section 1.4 Lost Certificates. If any Certificate shall have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by WEUS
claiming such Certificate to be lost, stolen, or destroyed and, if required by
the Surviving Corporation, the posting by WEUS of
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a bond, in such reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to such
Certificate, Parent will issue in exchange for such lost, stolen, or destroyed
Certificate the Merger Consideration to be paid in respect of the shares of
Company Stock represented by such Certificates as contemplated by this Article
I.
Section 1.5 Adjustments. If at any time during the period between the
date of this Agreement and the Effective Time, any change in the outstanding
shares of capital stock of Parent shall occur by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, or any stock dividend thereon with a record date during such period, the
Merger Consideration shall be adjusted appropriately.
Section 1.6 Amendment of Agreement. Notwithstanding any other provision
of this Agreement, Parent agrees with Weatherford, WEUS, and the Company that,
at the request of Weatherford at any time prior to the printing of the Proxy
Statement for mailing to Parent's stockholders, this Agreement may be amended to
reflect the purchase by an affiliate of Weatherford (other than the Company or
one of its subsidiaries) of an interest in the capital stock of the Company, or
such other structure that would reduce the transaction costs of the Merger to
Weatherford, WEUS, or the Company; provided, however, that such amendment shall
not adversely affect Parent or Merger Subsidiary or their transaction costs. If
a revised structure is substituted, the parties shall execute an appropriate
amendment to this Agreement in a form mutually acceptable to Parent and Merger
Subsidiary, on the one hand, and Weatherford, WEUS, and the Company, on the
other hand, to reflect the revised structure.
ARTICLE II
The Surviving Corporation
Section 2.1 Articles of Incorporation. The articles of incorporation of
Merger Subsidiary in effect at the Effective Time shall be the articles of
incorporation of the Surviving Corporation.
Section 2.2 Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 2.3 Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the officers and directors of the Company shall resign, (ii)
the directors of Merger Subsidiary at the Effective Time shall be the directors
of the Surviving Corporation, and (iii) the officers of Merger Subsidiary at the
Effective Time shall be the officers of the Surviving Corporation.
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ARTICLE III
Representations and Warranties of Weatherford, WEUS, and the Company
Weatherford, WEUS, and the Company represent and warrant to
Parent and the Merger Subsidiary as follows:
Section 3.1 Organization and Qualification. (a) The Company and each
subsidiary of the Company that is a corporation have been duly incorporated, are
validly existing as corporations in good standing under the laws of the
jurisdictions of their incorporation, with full corporate power and authority to
own, lease, and operate their assets and properties and to conduct their
businesses as they are now being conducted, and are duly registered or qualified
to transact business and in good standing in each jurisdiction, domestic or
foreign, in which the conduct of their businesses or their ownership or leasing
of property requires such registration or qualification, except to the extent
that the failure to be so qualified or to be in good standing is not reasonably
expected to have, individually or in the aggregate, a Company Material Adverse
Effect (as defined in Section 12.17). As used in this Agreement, the term
"subsidiary" or "subsidiaries," when used in connection with or reference to the
Company, shall mean the Persons (as defined in Section 12.17) in which the
Company directly or indirectly holds an ownership interest (other than Gas
Services International Limited, a British Virgin Islands corporation ("GSI"),
and its subsidiaries and their respective branches (together with GSI, the "GSI
Companies")), each of which is set forth in Schedule 3.2(b) of the Company
Disclosure Letter (as defined in Section 12.17).
(b) Each subsidiary of the Company that is not a corporation is
duly organized, is validly existing in good standing in the jurisdiction of its
organization, with full authority to own, lease, and operate its assets and
properties and to conduct its business as it is now being conducted, and is duly
registered or qualified to do business and is in good standing in each
jurisdiction, domestic or foreign, in which such registration or qualification
or good standing is required to conduct its business (whether by reason of the
ownership or leasing of property, the conduct of its business or otherwise),
except where the failure so to register or qualify or be in good standing would
not have a Company Material Adverse Effect.
(c) Weatherford, WEUS, or the Company has furnished to Parent
true and correct copies of the certificates of incorporation, bylaws, charters,
membership agreements, partnership agreements, operating agreements, joint
venture agreements, and other organizational documents of the Company and each
of its subsidiaries (the "Weatherford Organizational Documents").
Section 3.2 Capitalization. (a) The authorized capital stock of the
Company consists of 2,000 shares of Company Common Stock and no shares of
preferred stock, of which 2,000 shares of Company Common Stock and no shares of
preferred stock are issued and outstanding (the "Company Shares"). The Company
Shares are all of the issued and outstanding shares of capital stock of the
Company and have been duly authorized and validly issued and are fully paid and
non-assessable and free of preemptive rights. There are not any outstanding or
authorized subscriptions, options, warrants, calls, rights, commitments, phantom
stock plans, stock appreciation rights, or any other agreements of any character
(any of the foregoing, a
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"Commitment") relating to the issued or unissued capital stock of the Company
obligating the Company or any of its subsidiaries to issue or sell any
additional shares of capital stock of the Company or any other securities
convertible into or evidencing the right to subscribe for any shares of capital
stock of the Company. There are no outstanding contractual obligations of the
Company or any of its subsidiaries to repurchase, redeem, or otherwise acquire
any equity interests in the Company or to pay any dividend or make any other
distribution in respect thereof. Except as set forth on Schedule 3.2(a) of the
Company Disclosure Letter, WEUS owns all of the Company Shares free and clear of
any Lien (as defined in Section 12.17), option, right of first refusal, or
limitation on voting rights.
(b) Except as disclosed in Schedule 3.2(b) of the Company
Disclosure Letter, all of the issued and outstanding shares of capital stock or
ownership interests of each wholly owned subsidiary of the Company, and all of
the issued and outstanding shares of capital stock or ownership interests held
or owned by the Company of each subsidiary of the Company that is not a wholly
owned subsidiary (including those shares and ownership interests that will be
acquired by the Company prior to the Effective Time pursuant to the GC Agreement
or pursuant to Section 5.3), have been duly authorized and validly issued, are
fully paid and non-assessable (except as non-assessability may be affected by
the Delaware Revised Uniform Limited Partnership Act, as amended, or the
Delaware Limited Liability Company Act, as amended), and are owned by the
Company as of the date hereof (or will be owned by the Company prior to the
Effective Time pursuant to the GC Agreement or pursuant to Section 5.3), or
indirectly through one of its subsidiaries, free and clear of any Lien, option,
right of first refusal, and limitation on voting rights, except as may be
provided in the Weatherford Organizational Documents and except for Liens,
options, rights of first refusal, and limitations on voting rights, individually
or in the aggregate that do not and would not have a Company Material Adverse
Effect. Included in Schedule 3.2(b) of the Company Disclosure Letter is a list
of each subsidiary of the Company and the ownership interest of the Company and
each of its subsidiaries therein and, with respect to each subsidiary that is
not wholly owned, of any other Person as of the date hereof and as of the
Effective Time. There are not any Commitments relating to the issued or unissued
capital stock or other equity interests of any of the Company's subsidiaries
obligating the Company or any of its subsidiaries to issue or sell any
additional shares of capital stock or other equity interests of any subsidiary
of the Company, or any other securities convertible into or evidencing the right
to subscribe for any shares of capital stock or other equity interests of any
subsidiary of the Company. There are no outstanding contractual obligations of
the Company or any of its subsidiaries to repurchase, redeem, or otherwise
acquire any equity interests in such subsidiary or to pay any dividend or make
any other distribution in respect thereof, except as may be provided in the
Weatherford Organizational Documents and pursuant to the GC Agreement. Other
than the subsidiaries of the Company included in Schedule 3.2(b) of the Company
Disclosure Letter, neither the Company nor any of its subsidiaries holds any
ownership interest in any other Person. As of the date hereof and immediately
prior to the Effective Time, record owners of all of the issued and outstanding
capital stock and other equity interests of all subsidiaries of the Company are
and will be set forth on Schedule 3.2(b) of the Company Disclosure Letter.
Section 3.3 Authorization. Weatherford, WEUS, and the Company have the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated by this Agreement. WEUS, as the
sole stockholder of the Company,
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and the Board of Directors of the Company have by unanimous written consent (a)
determined that participating in the Merger is in the best interests of the
Company and its stockholder and (b) approved this Agreement and the Merger. No
other corporate, company, or partnership proceedings (as applicable) on the part
of Weatherford, WEUS, the Company, or any of its subsidiaries are necessary to
authorize the execution and delivery of this Agreement or the consummation by
Weatherford, WEUS, and the Company of the transactions contemplated hereby. This
Agreement has been duly authorized, executed, and delivered by Weatherford,
WEUS, and the Company and constitutes the valid and binding obligation of each
of them, enforceable against each of them in accordance with its terms, subject
to (x) applicable bankruptcy, insolvency, reorganization, moratorium, and other
similar laws of general application with respect to creditors, (y) general
principles of equity, and (z) the power of a court to deny enforcement of
remedies generally based upon public policy.
Section 3.4 Consents and Approvals; No Violation. Neither the execution
and delivery of this Agreement by Weatherford, WEUS, or the Company, nor the
consummation by Weatherford, WEUS, or the Company of the transactions
contemplated by this Agreement, will: (a) require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority (as defined in Section 12.17), except (i) the filing of a certificate
of merger in accordance with the DGCL and articles of merger in accordance with
the TBCA, (ii) in connection with the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), (iii) in connection with the filing of
premerger notification information with the Canadian Competition Bureau and the
expiration of the applicable waiting period(s) under Part IX of the Competition
Act (Canada) and the filing with Industry Canada under the Investment Canada
Act, (iv) any regulatory approvals or routine governmental consents normally
acquired after the consummation of transactions such as transactions of the
nature contemplated by this Agreement, or (v) where the failure to obtain such
consent, approval, authorization, or permit, or to make such filing or
notification, is not reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect or prevent or delay, in any
material respect, the consummation of the transactions contemplated by this
Agreement; (b) conflict with or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation, or acceleration of, or "put" right with respect to,
any obligation to or loss of a material benefit under, or result in the creation
of any Lien upon, any of the properties or assets of the Company or any of its
subsidiaries under or increase the amount or value of any payment under, any
provision of (i) any of the Weatherford Organizational Documents, (ii) any
material loan, credit agreement, bond, or indenture applicable to the Company or
any of its subsidiaries or any of their respective properties or assets, (iii)
any other note, mortgage, lease, agreement, instrument, permit, concession,
franchise, or license, in each case that is material to the Company and its
subsidiaries taken as a whole and that is applicable to the Company or any of
its subsidiaries or any of their respective properties or assets, or (iv)
subject to the governmental filings and other matters referenced by clause (a)
above, any law or arbitration award applicable to the Company or any of its
subsidiaries or any of their respective properties or assets, except for such
violations or defaults (or rights of termination, cancellation, or acceleration)
identified on Schedule 3.4 of the Company Disclosure Letter or (other than in
clause (b)(ii)) that are not reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect or prevent or delay, in any
material respect, the consummation of the transactions contemplated by this
Agreement; or (c) assuming compliance with the matters referred to in clause (a)
above, violate any order, writ, injunction,
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decree, statute, rule, or regulation applicable to the Company, any of its
subsidiaries, or any of their respective properties or assets, except for
violations which are not reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect or prevent or delay, in any
material respect, the consummation of the transactions contemplated by this
Agreement.
Section 3.5 Financial Statements. In Schedule 3.5 of the Company
Disclosure Letter are (a) the audited consolidated balance sheet, statement of
income, and statement of cash flows of the Partnership and its subsidiaries as
of and for the eleven months ended December 31, 1999 (the "Partnership Audited
Financial Statements") and (b) the unaudited consolidated balance sheet and
statement of income of the Partnership and its subsidiaries as of and for the
six months ended June 30, 2000 (the "Partnership Unaudited Financial
Statements"). The Partnership Audited Financial Statements, the audited balance
sheets, statements of income, and statements of cash flows of the Weatherford
Compression Business (as defined in the Formation Agreement (as defined in
Section 12.17)) as of and for the years ended December 31, 1997 and 1998 (the
"Weatherford Compression Business Historical Financial Statements"), and the
audited balance sheets, statements of income, and statements of cash flows of
the Global Compression Business (as defined in the Formation Agreement) as of
and for the years ended December 31, 1997 and 1998 (the "Global Compression
Business Historical Financial Statements") present fairly the consolidated
financial position, results of operations, and changes in financial position of
the Partnership, the Weatherford Compression Business, or the Global Compression
Business, as the case may be, and their respective subsidiaries as of the
respective dates or for the respective periods to which they apply in accordance
with United States generally accepted accounting principles, consistently
applied ("GAAP"), it being understood that such financial statements include the
ownership and results of operations of the Excluded Assets (as defined in
Section 5.2). The Company has provided Parent and Merger Subsidiary separate
financial information with respect to the GSI Companies, which was not prepared
in accordance with GAAP. The Partnership Unaudited Financial Statements have
been prepared in a manner consistent with the preparation of internal financial
statements of a subsidiary of Weatherford and are consistent with the books and
records of the Company and its subsidiaries. As of September 30, 2000, the total
consolidated indebtedness of the Company and its subsidiaries, was $294,900,000
under the Synthetic Leases, $13,000,000 under the line of credit with ABN Amro
and $1,915,000 under capital leases, aggregating $309,815,000.
Section 3.6 Undisclosed Liabilities. Except as reflected, reserved
against, or otherwise disclosed in the Partnership Unaudited Financial
Statements or as disclosed in Schedule 3.6 or any of the other Schedules of the
Company Disclosure Letter, neither the Company nor any of its subsidiaries had,
at the date of the unaudited balance sheet included in the Partnership Unaudited
Financial Statements (the "Partnership Unaudited Balance Sheet Date"), and,
except as have been incurred in the ordinary course of business since the
Partnership Unaudited Balance Sheet Date, none of them has, at the date hereof,
any liabilities or obligations, whether accrued, contingent, absolute,
determined, determinable, or otherwise, that are reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 3.7 Conduct of the Business Since Partnership Unaudited Balance
Sheet Date. Except as expressly contemplated by this Agreement and except as set
forth on Schedule 3.7 of the Company Disclosure Letter, since the Partnership
Unaudited Balance Sheet Date, (a) the
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business and operations of the Company and its subsidiaries have been conducted
in the ordinary and usual course in all material respects in accordance with
past practices; (b) neither the Company nor any of its subsidiaries has paid or
declared any dividend on, or made any distribution with respect to, or purchased
or redeemed any of its capital stock or ownership interests; (c) neither the
Company nor any of its subsidiaries has (i) granted to any employee, independent
contractor, or leased employee of the Company or any of its subsidiaries any
increase in compensation (including salaries, fees, commissions, bonuses, profit
sharing, incentive, pension, retirement, or other similar payments), except in
the ordinary course of business consistent with prior practices, (ii) granted to
any employee, independent contractor, or leased employee of the Company or any
of its subsidiaries any increase in severance or termination pay, except as was
required under employment, severance, or termination agreements in effect as of
the Partnership Unaudited Balance Sheet Date, or (iii) entered into any
employment, severance, or termination agreement with any such employee,
independent contractor, or leased employee; (d) there has been no damage,
destruction, or loss, whether or not covered by insurance, that has had or could
reasonably be expected to have a Company Material Adverse Effect; (e) there has
been no declaration, setting aside, or payment of any dividend or any other
distribution with respect to any of the capital stock or other equity interests
of the Company or any of its subsidiaries; and (f) there has been no
cancellation or waiver of any claims or rights of value that could reasonably be
expected to have a Company Material Adverse Effect.
Section 3.8 Litigation; Orders. Except as affects the oil and gas
industry generally, the compression sales and rental business generally, or as
set forth on Schedule 3.8 of the Company Disclosure Letter, as of the date
hereof there are no Actions (as defined in Section 12.17) pending of which
Weatherford, WEUS, the Company, or its subsidiaries have received actual notice
or, to the Knowledge (as defined in Section 12.17) of the Weatherford Entities
(as defined in Section 12.17), threatened against the Company or any of its
subsidiaries that are reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect or that would prevent or delay, in
any material respect, the consummation of the transactions contemplated by this
Agreement. Except as affects the oil and gas industry generally, the compression
sales and rental business generally, or as set forth on Schedule 3.8 of the
Company Disclosure Letter, as of the date hereof there are, to the Knowledge of
the Weatherford Entities, no outstanding judgments, orders, injunctions,
decrees, stipulations, or awards (whether rendered by a court or administrative
agency or by arbitration) against the Company or any of its subsidiaries, other
than those that do not involve amounts in excess of $1,000,000 in the aggregate
or those for which adequate reserves have been established in the Partnership
Unaudited Financial Statements.
Section 3.9 Licenses; Approvals. Except as set forth on Schedule 3.9 of
the Company Disclosure Letter, the Company and each of its subsidiaries, as
applicable, possess, and have been and continue to be in compliance with, all
governmental licenses, permits, franchises, and other authorizations of any
Governmental Authority ("Licenses") that are necessary to the ownership or
operation of the Business (as defined in Section 12.17) as currently conducted,
and all such Licenses are in full force and effect, except where the failure to
possess any License or the failure to be in full force and effect is not
reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect. No notice has been given, and no proceeding is pending
or, to the Knowledge of the Weatherford Entities, is threatened seeking the
revocation or
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limitation of any such License that is reasonably expected to have, individually
or in the aggregate, a Company Material Adverse Effect. No License shall be
modified, revoked, or shall lapse as a result of the Merger except where such
modification, revocation, or lapse would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 3.10 Labor Matters. Except as set forth on Schedule 3.10 of the
Company Disclosure Letter, or as may be required by local laws, there are no
collective bargaining or similar agreements relating to the compensation or
working conditions of any employees of the Company or any of its subsidiaries to
which the Company or any of its subsidiaries is a party or by which any of them
is bound. Except as set forth on Schedule 3.10 of the Company Disclosure Letter,
there is no obligation under any agreement for the Company or any of its
subsidiaries to recognize or bargain with any labor organization or union on
behalf of its employees. Neither the Company nor any of its subsidiaries is
subject to any proceeding or, to the Knowledge of the Weatherford Entities, has
been charged or threatened with a charge asserting that it or any subsidiary has
committed an unfair labor practice, in any case that would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. No representation election petition has been filed by the employees of
the Company or any of its subsidiaries, and no Weatherford Entity has any
Knowledge of any union organizational or representational activity involving any
of the employees. There are no picketing, strikes, or any material slowdowns,
work stoppages, disturbances, other "concerted actions," lockouts, arbitrations,
grievances, or other labor disputes involving the Company or any of its
subsidiaries, pending, or to the Knowledge of the Weatherford Entities,
threatened, in any case that would reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect. Neither the Company nor
any of its subsidiaries has taken any action that would constitute a "mass
layoff" or "plant closing" within the meaning of the Worker Adjustment and
Retraining Notification Act or otherwise trigger notice requirements under any
similar foreign, state, or local plant closing law.
Section 3.11 Compliance with Laws. Except as set forth on Schedule 3.11
of the Company Disclosure Letter, the Company and its subsidiaries have
conducted the Business in compliance with all arbitration awards, statutes,
laws, executive orders, regulations, ordinances, rules, judgments, orders, or
decrees applicable thereto (other than with respect to Environmental Laws (as
hereinafter defined), which are governed solely by Section 3.14, and with
respect to Tax matters, which are governed solely by Section 3.15), except for
violations or failures so to comply, if any, that are not reasonably expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
Except as set forth on Schedule 3.11 of the Company Disclosure Letter, to the
Knowledge of the Weatherford Entities, no condition or state of facts exists
that would reasonably be expected to provide a valid basis for any assertion
that the Business has not been so conducted.
Section 3.12 Insurance. Schedule 3.12 of the Company Disclosure Letter
sets forth a list of all insurance policies issued in favor of the Company or
its subsidiaries which relate to the Business, and all of such policies are
currently in force and effect.
Section 3.13 Material Contracts. (a) Except as set forth on Schedule
3.13 of the Company Disclosure Letter, as of the date hereof neither the Company
nor any of its subsidiaries
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is a party to or bound by any lease, agreement, or other contract or legally
binding contractual right or obligation of a type described below (collectively,
"Company Material Contracts"):
(i) any written employment agreement with any employee of the
Company or any of its subsidiaries providing for annual base
compensation in excess of $100,000 per year;
(ii) any collective bargaining agreement with any labor union
covering the employees of the Company or any of its subsidiaries;
(iii) any contract that would be required to be filed by the
Company or any of its subsidiaries with the Securities and Exchange
Commission (the "SEC") as exhibits to an Annual Report on Form 10-K if
the Company or any of its subsidiaries had securities registered under
the 1934 Act;
(iv) any agreement for capital expenditures or the acquisition or
construction of fixed assets that requires aggregate future payments
outside the ordinary course of business in excess of $2,000,000,
excluding expenditures for inventory and raw materials relating to the
fabrication or sale of equipment and parts in the ordinary course of
business;
(v) any indenture, mortgage, loan, credit, sale-leaseback,
guarantee, or other agreement under which the Company or any of its
subsidiaries has borrowed money in excess of $2,500,000 or issued, or
otherwise become obligated in connection with, any note, bond,
indenture, security interest, or other evidence of indebtedness for
borrowed money, sold and leased back assets, or guaranteed
indebtedness for money in excess of $2,500,000 borrowed by others
(excluding hedge, swap, exchange, or similar agreements entered into
in the ordinary course of business);
(vi) any agreement that constitutes a lease under which the
Company or any of its subsidiaries is the lessor or lessee of real or
personal property, that (A) cannot be terminated by the Company or a
subsidiary, as the case may be, without penalty upon not more than 180
calendar day's notice and (B) involves an annual base rental in excess
of $500,000, excluding leases under the Synthetic Leases and leases of
compressors and related equipment to customers in the ordinary course
of business; or
(vii) any other agreement not referenced in subsections (i)
through (vi) of this Section 3.13(a) that creates or imposes
non-competition obligations on the Company or any of its subsidiaries.
(b) Except as set forth on Schedule 3.13 of the Company Disclosure
Letter, each Company Material Contract listed on Schedule 3.13 of the Company
Disclosure Letter is a valid and binding obligation of the Company or a
subsidiary, as the case may be, enforceable against the Company or the
subsidiary, as the case may be, in accordance with its terms, subject to (i)
applicable bankruptcy, insolvency, reorganization, moratorium, and other similar
laws of general application with respect to creditors, (ii) general principles
of equity, and (iii) the power of a court to deny enforcement of remedies
generally based upon public policy. Except as set forth on Schedule 3.13 of the
Company Disclosure Letter, the Company and its subsidiaries
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have, performed all obligations required to be performed by them through the
date hereof under the Company Material Contracts listed on Schedule 3.13 of the
Company Disclosure Letter, other than any such obligations the failure of which
to perform are not reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect, and are not (with or without the
lapse of time or the giving of notice, or both) in breach or default in any
respect thereunder, except in any such case for such breaches or defaults that
are not reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 3.14 Environmental Matters. Except as set forth in Schedule
3.14 of the Company Disclosure Letter:
(a) The Company and its subsidiaries possess, and are in
compliance with, all permits (including air emission permits), licenses, and
government authorizations and have filed all notices and registrations that are
required under local, state, federal, and foreign laws relating to the
protection of the environment, ecology, pollution control, product registration,
workplace health and safety, and hazardous materials ("Environmental Laws")
applicable to the Company or any of its subsidiaries, its compressors and other
assets, and the Company and its subsidiaries are in compliance with, and the
Business is being operated in compliance with, all applicable limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables contained in those laws or contained in any other law,
regulation, code, plan, order, decree, judgment, notice, permit, or demand
letter issued, entered, promulgated, or approved thereunder, except where the
failure to possess such licenses and authorizations or be or operate the
Business in compliance therewith or to make such filings would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect;
(b) Neither the Company nor any of its subsidiaries has received
notice of actual or threatened liability under the Federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") or any similar
foreign, state, or local statute or ordinance from any Governmental Authority or
any third party, and no Weatherford Entity has any Knowledge of facts or
circumstances that would reasonably be expected to form the basis for the
assertion of any claim against the Company or any of its subsidiaries under any
Environmental Laws including, without limitation, CERCLA or any similar local,
state, or foreign law with respect to any on-site or off-site location, which
notice or claim would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect;
(c) Neither the Company nor any of its subsidiaries has entered
into or agreed to or contemplates entering into any consent decree or order, and
none of such entities is subject to any judgment, decree, or judicial or
administrative order, relating to compliance with, or the cleanup of hazardous
materials under, or compliance with any applicable Environmental Laws compliance
with which would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect;
(d) No Weatherford Entity has received notice that the Company or
any of its subsidiaries or any of its or their owned or leased properties is
subject to any claim, obligation, liability, loss, damage, or expense of
whatever kind or nature, contingent or otherwise (except for those matters the
consequences of which would not reasonably be expected to have, individually
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or in the aggregate, a Company Material Adverse Effect), incurred or imposed or
based upon any provision of any Environmental Law and arising out of any act or
omission of any of the Weatherford Entities, any of their employees, agents, or
representatives or, to the Knowledge of any of the Weatherford Entities, arising
out of the ownership, use, control, or operation by any of the Weatherford
Entities of any plant, facility, site, area, or property (including, without
limitation, any plant, facility, site, area, or property currently or previously
owned or leased by the Company, its subsidiaries, or their predecessors) from
which any Hazardous Materials were released into the environment, except where
the consequences of such release would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect (the term
"release" meaning any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or disposing into the
environment, and the term "environment" meaning any surface or ground water,
drinking water supply, soil, surface or subsurface strata or medium, or the
ambient air);
(e) To the Knowledge of any of the Weatherford Entities, none of
the properties owned, leased, or used by the Company or any of its subsidiaries
contains any friable asbestos, regulated PCBs, or underground storage tanks,
except where the presence of such would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect; and
(f) None of the Company or its subsidiaries is, or to the
Knowledge of any of the Weatherford Entities, has been, subject to any
administrative or judicial proceeding pursuant to, and, to the Knowledge of any
of the Weatherford Entities, none has been alleged to be in violation of,
applicable Environmental Laws or regulations any time during the past five
years, except where the consequences of any such proceeding, allegation, or
violation would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
As used in this Section 3.14, the term "Hazardous Materials"
means any waste, pollutant, hazardous substance, toxic, ignitable, reactive or
corrosive substance, hazardous waste, special waste, industrial substance,
by-product, process intermediate product or waste, petroleum or
petroleum-derived substance or waste, chemical liquids or solids, liquid or
gaseous products, or any constituent of any such substance or waste, the use,
handling, disposal of, or exposure to which by the Company or any of its
subsidiaries or any of their respective agents, contractors, and employees is
governed by or subject to any applicable law, rule or regulation of any
Governmental Authority.
Section 3.15 Taxes. Except as set forth on Schedule 3.15 of the Company
Disclosure Letter, (a) (i) the Company and each of its subsidiaries have filed
or caused to be filed when due all material state, local, and foreign Tax
Returns (as defined in Section 12.17) in connection with and in respect of the
Business, and, except for Taxes (as defined herein) that are being contested in
good faith and for which the Company and its subsidiaries have made adequate
provision, the Company and each of its subsidiaries have timely paid and
discharged all Tax obligations shown thereon; (ii) such Tax Returns in all
material respects correctly and accurately reflect the facts regarding the
income, business, and assets, operations, activities, status, or other matters
of the Company and each of its subsidiaries, and any other information required
to be shown thereon, and are not subject to accuracy-related penalties under any
applicable state, local, or foreign Tax
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law or any predecessor provision of such law; (iii) neither the Company nor any
of its subsidiaries has received any notice of any state, local, or foreign Tax
deficiency outstanding, proposed, or assessed against or allocable to it, nor
has any of them executed any waiver of any statute of limitations on the
assessment or collection of any state, local, or foreign Tax, or executed or
filed with any state, local, or foreign governmental body any agreement now in
effect extending the period for assessment or collection of any state, local, or
foreign Taxes against the Company or any of its subsidiaries; (iv) there are no
liens for any state, local, or foreign Taxes payable upon the assets of the
Company or any of its subsidiaries, other than statutory liens for Taxes not yet
due and payable or being contested in good faith; (v) the Company and each of
its subsidiaries have made provision for all state, local, or foreign Taxes
payable by the Company and its subsidiaries for which no Tax Return has yet been
filed; and (vi) there is no action, suit, proceeding, audit, or claim now
proposed, pending or, to the Knowledge of the Weatherford Entities, threatened
against or with respect to the Company or any of its subsidiaries in respect of
any state, local, or foreign Tax where there is a reasonable possibility of an
adverse determination. For purposes of this Agreement, "Tax" or "Taxes" means
taxes of any kind, levies or other like assessments, customs, duties, imposts,
charges, or fees, including, without limitation, income, gross receipts, ad
valorem, value added, excise, real or personal property, asset, sales, use,
license, payroll, transaction, capital, net worth, and franchise taxes,
estimated taxes, withholding, employment, social security, workers compensation,
utility, severance, production, unemployment compensation, occupation, premium,
windfall profits, transfer, and gains taxes or other governmental taxes imposed
or payable to the United States, or any state, county, local, or foreign
government or subdivision or agency thereof, and in each instance such term
shall include any interest, penalties, or additions to tax attributable to any
such Tax, including penalties for the failure to file any Tax Return.
(b) None of the assets of the Company or any subsidiary is
property that the Company is required to treat as being owned by any other
Person pursuant to the "safe harbor lease" provisions of former Section
168(f)(8) of the Code.
(c) None of the assets of the Company or any subsidiary directly
or indirectly secures any debt the interest on which is tax exempt under Section
103(a) of the Code.
(d) None of the assets of the Company or any subsidiary is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(e) Neither the Company nor any subsidiary has agreed to make,
nor is any of them required to make, any adjustment under Section 481(a) of the
Code by reason of a change in accounting method or otherwise.
(f) Neither the Company nor any subsidiary has participated in,
nor will any of them participate in, an international boycott within the meaning
of Section 999 of the Code.
(g) Neither the Company nor any subsidiary has filed a consent
pursuant to the collapsible corporation provisions of Section 341(f) of the Code
(or any corresponding provision of state, local, or foreign income tax law) or
agreed to have Section 341(f)(2) of the Code (or any corresponding provision of
state, local, or foreign income tax law) apply to any disposition of any asset
owned by any of them.
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Section 3.16 Employee Benefit Plans. (a) Schedule 3.16 of the Company
Disclosure Letter is a list of each of the following that is currently
sponsored, maintained, or contributed to by the Company or any of its
subsidiaries for the benefit of its or their employees:
(i) each "employee pension benefit plan" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) regardless of whether such plan is maintained
outside of the U.S. or primarily for the benefit of persons
substantially all of whom are non-resident aliens (sometimes
collectively referred to herein as "Company Pension Plans");
(ii) each "employee welfare benefit plan" (as defined in Section
3(l) of ERISA) regardless of whether such plan is maintained outside
of the U.S. or primarily for the benefit of persons substantially all
of whom are non-resident aliens (hereinafter a "Company Welfare
Plan");
(iii) each stock option, stock purchase, incentive, deferred
compensation plans or arrangements, vacation, change in control,
stay-on bonus plans or arrangements, and other material employee
compensation and fringe benefit plans or agreements, maintained,
contributed to, or pursuant to which the Company or any of its
subsidiaries have any current liability (all the foregoing in
subparagraphs (i), (ii) and (iii) being herein called "Company Benefit
Plans"), and each Company Benefit Plan currently enjoying any special
tax status is noted as such. The Company has made available to Parent
true, complete, and correct copies of (i) each Company Benefit Plan
and any subsequently adopted amendments thereto (or, in the case of
unwritten Company Benefit Plans, descriptions thereof), (ii) the most
recent annual report on Form 5500 filed with respect to each Company
Benefit Plan (if any such report was required), (iii) the most recent
summary plan description for each Company Benefit Plan for which such
a summary plan description is required (with all summaries of material
modifications provided after the most recent summary plan description
was distributed), (iv) each trust agreement and group annuity contract
relating to any Company Benefit Plan, and (v) each favorable
determination letter from the Internal Revenue Service with respect to
each Company Benefit Plan that is intended to be qualified under
Section 401(a) of the Code.
(b) All Company Benefit Plans are and have been administered in
compliance with their terms and all applicable laws, including, without
limitation, ERISA, the Code, and any other applicable law, except where the
failure to so administer the Company Benefit Plans or to comply with such laws
is not reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Each Company Pension Plan intended to be qualified
under Section 401(a) of the Code has received a determination letter (or will
receive a determination letter within the applicable remedial amendment period)
or is a standard prototype plan and continues to satisfy the requirements for
such qualification. There are no pending or, to the Knowledge of the Weatherford
Entities, threatened investigations by any governmental entity, termination
proceedings, or other claims (except claims for benefits payable in the normal
operation of the Company Benefit Plans), suits or proceedings against or
involving any Company Benefit Plan or asserting any rights or claims to benefits
under any Company Benefit Plan that are reasonably expected to result in a
liability in excess of $200,000 individually or $1,000,000 in the aggregate.
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(c) All contributions to, and payments from, the Company Benefit
Plans required to be made in accordance with the Company Benefit Plans have been
timely made in accordance with the terms of the Company Benefit Plans and
applicable law, other than contributions or payments the failure of which to
make are not reasonably expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
(d) No Company Benefit Plan is subject to Section 302 or Title
IV of ERISA or Section 412 of the Code or is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA.
(e) (i) No "prohibited transaction" (under Section 4975 of the
Code or Section 406 of ERISA) has occurred with respect to any Company Benefit
Plan, (ii) there has been no breach of any fiduciary duty with respect to any
Company Benefit Plan, and (iii) neither the Company nor any of its subsidiaries
has incurred any excise taxes or penalties with respect to any violation of
applicable law with respect to any Company Benefit Plan, other than, in the case
of (i), (ii), and (iii) those that are not reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(f) Neither the Company nor any of its subsidiaries maintains or
contributes to any Company Welfare Plan that could not be terminated by the
Company or any of its subsidiaries without material liability, and neither the
Company nor any of its subsidiaries maintains or contributes to any plan or
arrangement which provides or has any liability to provide life insurance or
medical or other employee welfare benefits to any employee or former employee
upon his or her retirement or termination of employment, except to the extent
such benefits are required to satisfy the minimum requirements under Part 6 of
Subtitle B of Title 1 of ERISA or any similar state or foreign law.
(g) Except as set forth on Schedule 3.16 of the Company
Disclosure Letter, or as otherwise provided or contemplated by the terms of this
Agreement, the execution, delivery and performance of, and consummation of the
transactions contemplated by, this Agreement will not (i) entitle any current or
former employee, director, officer, independent contractor, or leased employee
of the Company or any of its subsidiaries to severance pay or any other payment,
or (ii) accelerate the time of payment or vesting of, or increase the amount of,
compensation due any such person.
(h) Schedule 3.16 of the Company Disclosure Letter contains a
list of the names of the employees (the "Employees") of the Company and its
subsidiaries who own options to purchase common stock, par value $1.00 per
share, of Weatherford ("Weatherford Common Stock"), the number of shares of
Weatherford Common Stock subject to such options, and the vesting schedule and
the exercise price applicable to such options. At the Effective Time, each then
unvested option to purchase Weatherford Common Stock that is held by an Employee
(the "Employee Options") shall be canceled. Except as set forth on Schedule 3.16
of the Company Disclosure Letter, the consummation of the transactions
contemplated by this Agreement and/or the Stockholders' Agreement will not
accelerate the vesting or exercise date of any Employee Options.
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Section 3.17 Brokerage Fees and Commissions. Except for Simmons &
Company International, no broker, finder, or financial adviser has acted
directly or indirectly as such for, or is entitled to any compensation from, any
Weatherford, Entity in connection with this Agreement or the transactions
contemplated hereby. Weatherford and WEUS will be solely responsible for the
payment of any and all fees to Simmons & Company International, and Parent and
the Company shall have no liability or responsibility therefor.
Section 3.18 Tax Treatment. Neither the Company nor, to the Knowledge
of the Weatherford Entities, any of its affiliates (as defined in Section 12.17)
has taken, has agreed or failed to take, or intends to take any action or has
any Knowledge of any fact or circumstance that would prevent the Merger from
qualifying as a reorganization within the meaning of Section 368 of the Code (a
"368 Reorganization") if consummated in accordance with this Agreement.
Section 3.19 Proxy Statement. None of the information to be supplied by
Weatherford, WEUS or the Company for inclusion in the proxy statement to be
distributed in connection with the Parent Stockholders' Meeting (as defined in
Section 12.17) to vote upon the issuance of the Parent Common Stock to WEUS
pursuant to this Agreement (the "Proxy Statement") will, at the time of the
mailing of the Proxy Statement and any amendments or supplements thereto and at
the time of the Parent Stockholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. No representation is
made by any Weatherford Entity with respect to information supplied by Parent,
Merger Subsidiary or their representatives for inclusion therein.
Section 3.20 No Excess Parachute Payments. Except as disclosed in
Schedule 3.20 of the Company Disclosure Letter, no amount that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement by any employee, officer, or
director of the Company or any of its subsidiaries who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) would be characterized as an "excess parachute payment" (as such term
is defined in Section 280G(b)(1) of the Code) or would be non-deductible by
reason of Code Section 162(m).
Section 3.21 Certain Business Relationships With Affiliates. Except as
set forth on Schedule 3.21 of the Company Disclosure Letter, no affiliate of the
Company or of any of its subsidiaries (a) owns any property or right, tangible
or intangible, which is used in the Business, (b) to the Knowledge of the
Weatherford Entities, has any claim or cause of action against the Company or
any of its subsidiaries, or (c) owes any money to, or is owed any money by, the
Company or any of its subsidiaries. Schedule 3.21 of the Company Disclosure
Letter describes any material transactions or relationships between the Company,
its subsidiaries, and any affiliate thereof which have occurred or existed since
December 31, 1999.
Section 3.22 Title; Assets. The Company and each of its subsidiaries
has good and indefeasible title to, or a valid interest in, all of its real
property, and good title to, or a valid interest in, all of its compressors and
other material personal property and assets reflected on the Partnership
Unaudited Financial Statements as owned or leased by it or otherwise used in the
Business, in each case free and clear of all Liens, except for Permitted
Encumbrances (as defined in Section 12.17) or as set forth on Schedule 3.22 of
the Company Disclosure Letter. Except as
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set forth in Schedule 3.22 of the Company Disclosure Letter and except for
obligations created after the date of this Agreement as permitted by this
Agreement, neither the Company nor any of its subsidiaries has any legal
obligation, absolute or contingent, to sell, lease, or otherwise dispose of any
of its real property, compressors, or other material personal property and
assets, other than pursuant to mortgages and security interests incurred in the
ordinary course of business, Permitted Encumbrances, or as disclosed on Schedule
3.22 of the Company Disclosure Letter.
Section 3.23 Ownership of Parent Common Stock. Immediately prior to the
execution of this Agreement, none of Weatherford or its "affiliates" (as defined
in Section 203 of the DGCL) or "associates" (as defined in Section 203 of the
DGCL) is an "interested stockholder" (as defined in Section 203 of the DGCL) of
Parent.
ARTICLE IV
Representations and Warranties of Parent and Merger Subsidiary
Parent and Merger Subsidiary represent and warrant to
Weatherford, WEUS, Benstar and the Company as follows:
Section 4.1 Organization and Qualification. Parent, Merger Subsidiary,
and each subsidiary of Parent are corporations duly incorporated and validly
existing as corporations in good standing under the laws of the jurisdictions of
their incorporation, with full corporate power and authority to own, lease, and
operate their assets and properties and to conduct their businesses as they are
now conducted. Parent and each of its subsidiaries are duly registered or
qualified to transact business and in good standing in each jurisdiction,
domestic or foreign, in which the conduct of their respective business or their
ownership or leasing of property requires such registration or qualification,
except to the extent that the failure to be so qualified or to be in good
standing is not reasonably expected to have, individually or in the aggregate, a
Parent Material Adverse Effect (as defined in Section 12.17). Parent has
heretofore furnished to the Company true and correct copies of the certificate
of incorporation, bylaws, and other organizational documents (the "Parent
Organizational Documents") of Parent and each of its subsidiaries as currently
in effect. The Parent Organizational Documents are in full force and effect, and
the Parent is not in violation thereof. As used in this Agreement, the terms,
"subsidiary" or "subsidiaries" when used in connection with or reference to the
Parent, shall mean the Persons in which the Parent directly or indirectly holds
an ownership interest, each of which is set forth in Schedule 4.2(b) of the
Parent Disclosure Letter (as defined in Section 12.17).
Section 4.2 Capitalization. (a) The authorized capital stock of Parent
consists of 200,000,000 shares of Parent Common Stock, and 50,000,000 shares of
preferred stock, par value $0.01 per share. As of October 20, 2000, there were
issued and outstanding 14,664,038 shares of Parent Common Stock (the "Parent
Shares") including 13,242 shares of treasury stock and options to purchase an
aggregate of 881,194 shares of Parent Common Stock, and a total of 1,906,361
shares reserved for issuance under the Parent's Benefit Plans listed on Schedule
4.2(a). The Parent Shares are all of the issued and outstanding shares of
capital stock of Parent and have been duly authorized and validly issued and are
fully paid and non-assessable and free
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of preemptive rights. Except as set forth in this Section 4.2 and except for
changes since June 30, 2000 resulting from the exercise of stock options
outstanding as of June 30, 2000, or the grant of stock based compensation to
directors or employees, there are not any Commitments relating to the issued or
unissued capital stock of Parent obligating Parent or any of its subsidiaries to
issue or sell any additional shares of capital stock of Parent or any other
securities convertible into or evidencing the right to subscribe for any shares
of capital stock of Parent. There are no outstanding contractual obligations of
Parent or any of its subsidiaries to repurchase, redeem, or otherwise acquire
any equity interests in Parent or to pay any dividend or make any other
distribution in respect thereof.
(b) All of the issued and outstanding shares of capital stock of
each subsidiary of Parent have been duly authorized and validly issued, are
fully paid and non-assessable, and are owned by Parent, or indirectly through
one of its subsidiaries, free and clear of any Lien, option, right of first
refusal, and limitation on voting rights, except for Liens, options, rights of
first refusal, and limitations on voting rights, individually or in the
aggregate that do not and would not have a Parent Material Adverse Effect.
Included in Schedule 4.2(b) of the Parent Disclosure Letter is a list of each
subsidiary of Parent and the ownership interest of Parent and each of its
subsidiaries therein and, with respect to each subsidiary that is not wholly
owned, of any other Person. There are not any Commitments relating to the issued
or unissued capital stock of any of Parent's subsidiaries obligating Parent or
any of its subsidiaries to issue or sell any additional shares of capital stock
of any subsidiary of Parent, or any other securities convertible into or
evidencing the right to subscribe for any shares of capital stock of any
subsidiary of Parent. There are no outstanding contractual obligations of Parent
or any of its subsidiaries to repurchase, redeem, or otherwise acquire any
equity interests in such subsidiary or to pay any dividend or make any other
distribution in respect thereof. Other than the subsidiaries of Parent included
in Schedule 4.2(b) of the Parent Disclosure Letter, neither Parent nor any of
its subsidiaries holds any ownership interest in any other Person. As of the
date hereof and immediately prior to the Effective Time, record owners of all of
the issued and outstanding capital stock and other equity interests of all
subsidiaries of Parent are and will be set forth on Schedule 4.2(b) of the
Parent Disclosure Letter.
(c) Except as set forth on Schedule 4.2(c) of the Parent
Disclosure Letter, the consummation of the transactions contemplated by this
Agreement and/or the Stockholders' Agreement will not accelerate the vesting or
exercise date of any outstanding options issued by Parent or any of its
subsidiaries pursuant to any option plan or option agreement to purchase Parent
Common Stock, and no director, independent contractor, or employee of the
Company will be entitled to any additional benefits or any acceleration of the
time of payment or vesting of any benefits under any Parent Employee Plan (as
hereinafter defined) or employment or severance agreement with any employee,
director or officer of Parent or any of its subsidiaries as a result of the
consummation of the transactions contemplated by this Agreement or the
Stockholders' Agreement.
(d) The shares of Parent Common Stock to be issued as the Merger
Consideration and upon the exercise of any options granted pursuant to Section
1.3 have been duly authorized and reserved for issuance and, when issued and
delivered in accordance with the terms of this Agreement or the relevant option
agreements, as applicable, will have been validly issued and will be fully paid
and non-assessable (assuming, in the case of options, the payment
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of the exercise price), and the issuance thereof is not subject to any
preemptive or other similar right.
Section 4.3 Authorization. Parent and Merger Subsidiary have the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated by this Agreement. Parent, as
sole stockholder of Merger Subsidiary, and the Board of Directors of Parent have
by unanimous written consent (a) determined that participating in the Merger is
in the best interests of Parent and Merger Subsidiary and their stockholders,
(b) approved this Agreement and the Merger, and (c) authorized the issuance of
the Parent Common Stock to be issued in connection with the Merger. Except for
the Parent Stockholders' Approval (as defined in Section 12.17), no other
corporate proceedings on the part of Parent, Merger Subsidiary, or any of
Parent's subsidiaries are necessary to authorize the execution and delivery of
this Agreement or the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby. This Agreement has been duly authorized,
executed, and delivered by Parent and Merger Subsidiary and constitutes the
valid and binding obligation of each of them, enforceable against each of them
in accordance with its terms, subject to (x) applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws of general application with
respect to creditors, (y) general principles of equity and (z) the power of a
court to deny enforcement of remedies generally based upon public policy.
Section 4.4 Consents and Approval; No Violation. Except as set forth in
Schedule 4.4 of the Parent Disclosure Letter and except for the Parent
Stockholders' Approval, neither the execution and delivery of this Agreement by
Parent or Merger Subsidiary, nor the consummation by Parent or Merger Subsidiary
of the transactions contemplated by this Agreement, will: (a) require any
consent, approval, authorization, or permit of, or filing with or notification
to, any Governmental Authority, except (i) the filing of a certificate of merger
in accordance with the DGCL and articles of merger in accordance with the TBCA,
(ii) compliance with any applicable requirements of the Securities Act of 1933,
as amended (the "1933 Act"), the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and foreign or state securities or Blue Sky laws, (iii) in
connection with the HSR Act, (iv) in connection with the filing of premerger
notification information with the Canadian Competition Bureau and the expiration
of the applicable waiting period(s) under Part IX of the Competition Act
(Canada) and the filing with Industry Canada under the Investment Canada Act,
(v) any regulatory approvals or routine governmental consents normally acquired
after the consummation of transactions such as transactions of the nature
contemplated by this Agreement, or (vi) where the failure to obtain such
consent, approval, authorization, or permit, or to make such filing or
notification, is not reasonably expected to have, individually or in the
aggregate, a Parent Material Adverse Effect or prevent or delay, in any material
respect, the consummation of the transactions contemplated by this Agreement;
(b) conflict with or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation, or acceleration of, or "put" right with respect to, any obligation
to or loss of a material benefit under, or result in the creation of any Lien,
upon any of the properties or assets of Parent or any of its subsidiaries under
any provision of (i) any of the Parent Organizational Documents, (ii) any
material loan, credit agreement, bond, or indenture applicable to Parent or any
of its subsidiaries or any of their respective properties or assets, (iii) any
other note, mortgage, lease, agreement, instrument, permit, concession,
franchise, or license, in each case that is material to Parent and its
subsidiaries taken as a whole and that is applicable to Parent or any of its
subsidiaries or any
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of their respective properties or assets, or (iv) subject to the governmental
filings and other matters referenced by clause (a) above, any law or arbitration
award applicable to Parent or any of its subsidiaries or any of their respective
properties or assets, except as identified in Schedule 4.4 of the Parent
Disclosure Letter and except for such violations or defaults (or rights of
termination, cancellation, or acceleration) as to which requisite waivers or
consents have been obtained or will be obtained prior to the Effective Time or
(other than in clause (b)(ii)) that are not reasonably expected to have,
individually or in the aggregate, a Parent Material Adverse Effect or prevent or
delay, in any material respect, the consummation of the transactions
contemplated by this Agreement; or (c) assuming compliance with the matters
referred to in clause (a) above and assuming Parent Stockholders' Approval is
obtained, violate any order, writ, injunction, decree, statute, rule, or
regulation applicable to Parent or any of its subsidiaries, or any of their
assets, except for violations which are not reasonably expected to have,
individually or in the aggregate, a Parent Material Adverse Effect or prevent or
delay, in any material respect, the consummation of the transactions
contemplated by this Agreement.
Section 4.5 SEC Filings. (a) Parent has furnished to the Company (i)
Parent's annual report on Form 10-K for the fiscal year ended March 31, 2000
("Parent 10-K"), (ii) its quarterly reports on Form 10-Q for its fiscal quarters
ended after March 31, 2000, (iii) its proxy or information statements relating
to meetings of or actions taken without a meeting by Parent's stockholders held
since March 31, 2000, and (iv) all of its other reports, statements, schedules,
and registration statements filed with the SEC since March 31, 2000 (the
documents referred to in this Section 4.5(a) being referred to collectively as
the "Parent SEC Filings"). The Parent's quarterly report on Form 10-Q for its
fiscal quarter ended June 30, 2000 is referred to herein as the "Parent 10-Q."
(b) As of its filing date, each Parent SEC Filing complied as
to form in all material respects with the applicable requirements of the 1933
Act and the 1934 Act.
(c) As of its filing date, each Parent SEC Filing filed pursuant
to the 1934 Act did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(d) Each such registration statement as amended or supplemented,
if applicable, filed pursuant to the 1933 Act did not, as of the date such
statement or amendment became effective, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
Section 4.6 Financial Statements. (a) The audited consolidated
financial statements and the unaudited interim consolidated financial statements
of Parent included in the Parent SEC Filings comply in all material respects
with applicable accounting requirements, present fairly the consolidated
financial position, results of operations, and changes in financial position of
Parent and its subsidiaries as of the respective dates or for the respective
periods to which they apply in accordance with GAAP, and are consistent with the
books and records of Parent and its subsidiaries. For purposes of this
Agreement, "Parent Unaudited Balance Sheet" means the consolidated balance sheet
of Parent as of June 30, 2000 set forth in the Parent 10-Q and "Parent Unaudited
Balance Sheet Date" means June 30, 2000.
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(b) Parent has heretofore furnished to Weatherford the audited
consolidated balance sheets of Gas Compression Services, Inc., a Michigan
corporation ("GCSI"), as of July 31, 1999 and July 31, 2000, and the related
consolidated statements of income, stockholders' equity and cash flow for the
years then ended, all certified by Follmer, Rudzewicz & Co., P.C., whose
unqualified reports thereon are included therewith. To Parent's Knowledge, such
financial statements (including the footnotes thereto) were prepared in
accordance with GAAP consistently applied, and present fairly, in all material
respects, GCSI's consolidated financial condition, results of the operations and
cash flows as of the dates and for the periods presented.
Section 4.7 Undisclosed Liabilities. Except as set forth in the Parent
SEC Filings or as reflected, reserved against, or otherwise disclosed in the
Parent Unaudited Balance Sheet, Parent did not have, at the Parent Unaudited
Balance Sheet Date, and, except as have been incurred in the ordinary course of
business since the Parent Unaudited Balance Sheet Date, does not have, at the
date hereof, any liabilities or obligations, whether accrued, contingent,
absolute, determined, determinable, or otherwise, that are reasonably expected
to have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.8 Conduct of the Business Since Parent Unaudited Balance
Sheet Date. Except as expressly contemplated by this Agreement and except as set
forth on Schedule 4.8 of the Parent Disclosure Letter, since the Parent
Unaudited Balance Sheet Date, (a) the business and operations of Parent and its
subsidiaries have been conducted in the ordinary and usual course in all
material respects in accordance with past practices, (b) Parent has not paid or
declared any dividend on, or made any distribution with respect to, or purchased
or redeemed any of its capital stock, (c) there has been no damage, destruction,
or loss, whether or not covered by insurance, that has or reasonably could be
expected to have a Parent Material Adverse Effect; and (d) there has been no
cancellation or waiver of any claims or rights of value that could reasonably be
expected to have a Parent Material Adverse Effect.
Section 4.9 Litigation; Orders. Except as set forth in the Parent SEC
Filings, as affects the oil and gas industry generally, the compression sales
and rental business generally, or as set forth on Schedule 4.9 of the Parent
Disclosure Letter, as of the date hereof, there are no Actions pending of which
Parent or its subsidiaries have received actual notice or, to the Knowledge of
Parent or any of its subsidiaries, threatened against Parent or any of its
subsidiaries that are reasonably expected to have, individually or in the
aggregate, a Parent Material Adverse Effect or that would prevent or delay, in
any material respect, the consummation of the transactions contemplated by this
Agreement. Except as set forth in the Parent SEC Filings, as affects the oil and
gas industry generally, the compression sales and rental business generally, or
as set forth on Schedule 4.9 of the Parent Disclosure Letter, as of the date
hereof, there are, to the Knowledge of Parent or any of its subsidiaries, no
outstanding judgments, orders, injunctions, decrees, stipulations, or awards
(whether rendered by a court or administrative agency or by arbitration) against
Parent or any of its subsidiaries other than those that do not involve amounts
in excess of $1,000,000 in the aggregate or those for which reserves have been
established in the Parent Unaudited Financial Statements.
Section 4.10 Licenses; Approvals. Except as set forth in Schedule 4.10
of the Parent Disclosure Letter, Parent and its subsidiaries possess, and have
been and continue to be in compliance with, all Licenses that are necessary to
the ownership or operation of their business
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as currently conducted, and all such Licenses are in full force and effect,
except where the failure to possess any License or the failure to be in full
force and effect is not reasonably expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. Except as set forth in Schedule
4.10 of the Parent Disclosure Letter, no notice has been given, and no
proceeding is pending or, to the Knowledge of Parent or any of its subsidiaries,
threatened seeking the revocation or limitation of any such License that is
reasonably expected to have, individually or in the aggregate, a Parent Material
Adverse Effect. Except as set forth in Schedule 4.10 of the Parent Disclosure
Letter, no License shall be modified, revoked, or shall lapse as a result of the
Merger except where such modification, revocation, or lapse would not reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
Section 4.11 Labor Matters. Except as set forth in the Parent SEC
Filings, or as may be required by local laws, there are no collective bargaining
or similar agreements relating to the compensation or working conditions of any
employees of Parent or any of its subsidiaries to which Parent or any of its
subsidiaries is a party or by which any of them is bound. Neither Parent nor any
of its subsidiaries is the subject of any proceeding or, to the Knowledge of
Parent or its subsidiaries, has been charged or threatened with a charge
asserting that it or any subsidiary has committed an unfair labor practice, in
any case that would reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. No material work stoppage against
Parent or any of its subsidiaries is pending or, to Parent's Knowledge,
threatened. Neither Parent nor any of its subsidiaries is involved in or, to
Parent's Knowledge, is threatened with any picketing, strikes, or any material
slowdowns, work stoppages, disturbances, other "concerted actions," lockouts,
arbitrations, grievances, labor dispute, arbitration, lawsuit, or administrative
proceeding relating to labor matters involving the employees of Parent or any of
its subsidiaries (excluding routine workers' compensation claims) that is
reasonably expected to have, individually or in the aggregate, a Parent Material
Adverse Effect.
Section 4.12 Compliance with Laws. Except as set forth on Schedule 4.12
of the Parent Disclosure Letter, Parent and its subsidiaries have conducted
their business in compliance with all arbitration awards, statutes, laws,
executive orders, regulations, ordinances, rules, judgments, orders, or decrees
applicable thereto (other than Environmental Laws which are governed solely by
Section 4.14 and with respect to Tax matters, which are governed solely by
Section 4.15), except as set forth in the Parent SEC Filings and except for
violations or failures so to comply, if any, that are not reasonably expected to
have, individually or in the aggregate, a Parent Material Adverse Effect. To the
Knowledge of Parent or any of its subsidiaries, no condition or state of facts
exists that would reasonably be expected to provide a valid basis for any
assertion that the business of Parent and its subsidiaries has not been so
conducted.
Section 4.13 Material Contracts. (a) Except as set forth on Schedule
4.13 of the Parent Disclosure Letter, or as filed as exhibits to its SEC
filings, as of the date hereof neither Parent nor any of its subsidiaries is a
party to or bound by any lease, agreement, or other contract or legally binding
contractual right or obligation of a type described below (collectively, "Parent
Material Contracts"):
(i) any written employment agreement with any employee of Parent
or any of its subsidiaries providing for annual base compensation in
excess of $100,000 per year;
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(ii) any collective bargaining agreement with any labor union
covering the employees of Parent or any of its subsidiaries;
(iii) any contract required to be filed by Parent or any of its
subsidiaries with the SEC as exhibits to its Annual Report on Form
10-K;
(iv) any agreement for capital expenditures or the acquisition or
construction of fixed assets that requires aggregate future payments
outside the ordinary course of business in excess of $2,000,000,
excluding expenditures for inventory and raw materials relating to the
fabrication or sale of equipment and parts in the ordinary course of
business;
(v) any indenture, mortgage, loan, credit, sale-leaseback,
guarantee, or other agreement under which Parent or any of its
subsidiaries has borrowed money in excess of $2,500,000 or issued, or
otherwise become obligated in connection with, any note, bond,
indenture, security interest, or other evidence of indebtedness for
borrowed money, sold and leased back assets, or guaranteed
indebtedness for money in excess of $2,500,000 borrowed by others
(excluding hedge, swap, exchange, or similar agreements entered into
in the ordinary course of business);
(vi) any agreement that constitutes a lease under which Parent or
any of its subsidiaries is the lessor or lessee of real or personal
property, that (A) cannot be terminated by Parent or a subsidiary, as
the case may be, without penalty upon not more than 180 calendar day's
notice and (B) involves an annual base rental in excess of $500,000,
excluding leases under the synthetic leases to which Parent or its
subsidiaries is a party and leases of compressors to customers in the
ordinary course of business; and
(vii) any other agreement not referenced in subsections (i)
through (vi) of this Section 4.13(a) that creates or imposes
non-competition obligations on Parent or any of its subsidiaries.
(b) Except as set forth on Schedule 4.13, each Parent Material
Contract is a valid and binding obligation of Parent or a subsidiary of Parent,
as the case may be, enforceable against Parent or the subsidiary, as the case
may be, in accordance with its terms, subject to (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and other similar laws of general
application with respect to creditors, (ii) general principles of equity, and
(iii) the power of a court to deny enforcement of remedies generally based upon
public policy. Except as set forth on Schedule 4.13, Parent and its subsidiaries
have performed all obligations required to be performed by them through the date
hereof under the Parent Material Contracts, other than any such obligations the
failure of which to perform are not reasonably expected to have, individually or
in the aggregate, a Parent Material Adverse Effect, and are not (with or without
the lapse of time or the giving of notice, or both) in breach or default in any
respect thereunder, except in any such case for such breaches or defaults that
are not reasonably expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
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Section 4.14 Environmental Matters. Except as set forth in Schedule
4.14 of the Parent Disclosure Letter:
(a) Parent and its subsidiaries possess, and are in compliance
with, all permits (including air emission permits), licenses, and government
authorizations and have filed all notices and registrations that are required
under Environmental Laws applicable to Parent or any of its subsidiaries, its
compressors and other assets, and Parent and its subsidiaries are in compliance
with, and are operating their respective businesses in compliance with, all
applicable limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables contained in those laws or
contained in any other law, regulation, code, plan, order, decree, judgment,
notice, permit, or demand letter issued, entered, promulgated, or approved
thereunder, except where the failure to possess such licenses and authorizations
or be or operate in compliance therewith or to make such filings would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect;
(b) Neither Parent nor any of its subsidiaries has received
notice of actual or threatened liability under CERCLA or any similar foreign,
state, or local statute or ordinance from any Governmental Authority or any
third party, and neither Parent nor any of its subsidiaries has any Knowledge of
facts or circumstances that would reasonably be expected to form the basis for
the assertion of any claim against Parent or any of its subsidiaries under any
Environmental Laws including, without limitation, CERCLA or any similar local,
state, or foreign law with respect to any on-site or off-site location, which
notice or claim would reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect;
(c) Neither Parent nor any of its subsidiaries has entered into
or agreed to or contemplates entering into any consent decree or order, and none
of such entities is subject to any judgment, decree, or judicial or
administrative order, relating to compliance with, or the cleanup of hazardous
materials under, or compliance with any applicable Environmental Laws compliance
with which would reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect;
(d) Neither Parent nor any of its subsidiaries has received
notice that Parent or any of its subsidiaries or any of its or their owned or
leased properties is subject to any claim, obligation, liability, loss, damage,
or expense of whatever kind or nature, contingent or otherwise (except for those
matters the consequences of which would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect), incurred or
imposed or based upon any provision of any Environmental Law and arising out of
any act or omission of Parent, any of its subsidiaries, any of their employees,
agents, or representatives or, to the Knowledge of Parent or any of its
subsidiaries, arising out of the ownership, use, control, or operation by Parent
or any of its subsidiaries of any plant, facility, site, area, or property
(including, without limitation, any plant, facility, site, area, or property
currently or previously owned or leased by Parent, its subsidiaries, or their
predecessors) from which any Hazardous Materials were released into the
environment, except where the consequences of such release would not reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect (the term "release" meaning any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing into the environment, and the term "environment" meaning any surface
or ground water, drinking water supply, soil, surface or subsurface strata or
medium, or the ambient air);
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(e) To the Knowledge of Parent or any of its subsidiaries, none
of the properties owned, leased, or used by Parent or any of its subsidiaries
contains any friable asbestos, regulated PCBs, or underground storage tanks,
except where the presence of such would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect; and
(f) None of Parent or its subsidiaries is, or to the Knowledge of
Parent or any of its subsidiaries has been, subject to any administrative or
judicial proceeding pursuant to, and, to the Knowledge of Parent or any of its
subsidiaries, none has been alleged to be in violation of, applicable
Environmental Laws or regulations any time during the past five years, except
where the consequences of any such proceeding, allegation, or violation would
not reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
As used in this Section 4.14, the term "Hazardous Materials"
means any waste, pollutant, hazardous substance, toxic, ignitable, reactive or
corrosive substance, hazardous waste, special waste, industrial substance,
by-product, process intermediate product or waste, petroleum or
petroleum-derived substance or waste, chemical liquids or solids, liquid or
gaseous products, or any constituent of any such substance or waste, the use,
handling, disposal of, or exposure to which by Parent or any of its subsidiaries
or any of their respective agents, contractors, and employees is governed by or
subject to any applicable law, rule or regulation of any Governmental Authority.
Section 4.15 Taxes. (a) (i) Except as set forth on Schedule 4.15 of the
Parent Disclosure Letter, Parent and its subsidiaries have filed when due all
material Parent Returns (as defined in Section 12.17) in connection with and in
respect of their business, and have, except for Taxes that are being contested
in good faith, that have corresponding reserves established on the Parent
Unaudited Financial Statements (as defined in Section 12.17), and that are set
forth on Schedule 4.15, timely paid and discharged all Tax obligations shown
thereon; (ii) the Parent Returns in all material respects correctly and
accurately reflect the facts regarding the income, business and assets,
operations, activities, status, or other matters of Parent and its subsidiaries,
and any other information required to be shown thereon, and are not subject to
penalties under Section 6662 of the Code, relating to accuracy-related
penalties, or any corresponding provision of applicable state, local, or foreign
Tax law or any predecessor provision of law; (iii) neither Parent nor any of its
subsidiaries has received any notice of any federal, state, local, or foreign
Tax deficiency outstanding, proposed, or assessed against or allocable to it,
nor has Parent nor any of its subsidiaries executed any waiver of any statute of
limitations on the assessment or collection of any federal, state, local, or
foreign Tax, or executed or filed with any federal, state, local, or foreign
governmental body any agreement now in effect extending the period for
assessment or collection of any federal, state, local, or foreign Taxes against
Parent; (iv) there are no liens for any federal, state, local, or foreign Taxes
payable upon the assets of Parent or any of its subsidiaries, other than
statutory liens for Taxes not yet due and payable or being contested in good
faith; (v) Parent and its subsidiaries have made provision for all Taxes payable
by Parent and its subsidiaries for which no Parent Return has yet been filed;
and (vi) there is no action, suit, proceeding, audit, or claim now proposed,
pending or, to the Knowledge of Parent, threatened against or with respect to
Parent or any of its subsidiaries in respect of any federal, state, local, or
foreign Tax where there is a reasonable possibility of an adverse determination.
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(b) Except for the "affiliated group" (within the meaning of
Section 1504(a) of the Code) of which Parent is currently the "common parent,"
neither Parent nor any of its subsidiaries has ever been a member of an
affiliated group of corporations.
Section 4.16 Employee Benefit Plans. (a) Set forth in Schedule 4.16 of
the Parent Disclosure Letter is a list of each of the following that is
currently sponsored, maintained, or contributed to by Parent or any of its
subsidiaries for the benefit of its or their employees: (i) each "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) regardless of
whether such plan is maintained outside of the U.S. or primarily for the benefit
of persons substantially all of whom are non-resident aliens (sometimes
collectively referred to herein as "Parent Pension Plans"); (ii) each "employee
welfare benefit plan" (as defined in Section 3(l) of ERISA) regardless of
whether such plan is maintained outside of the U.S. or primarily for the benefit
of persons substantially all of whom are non-resident aliens (hereinafter a
"Parent Welfare Plan"); and (iii) each stock option, stock purchase, incentive,
deferred compensation plans or arrangements, vacation, change in control,
stay-on bonus plans or arrangements, and other material employee compensation
and fringe benefit plans or agreements, maintained, contributed to, or pursuant
to which Parent or any of its subsidiaries have any current liability (all the
foregoing in subparagraphs (i), (ii), and (iii) being herein called "Parent
Employee Plans"), and each Parent Employee Plan currently enjoying any special
tax status is noted as such. Parent has made available to WEUS true, complete,
and correct copies of (i) each Parent Employee Plan and any subsequently adopted
amendments thereto (or, in the case of unwritten Parent Employee Plans,
descriptions thereof), (ii) the most recent annual report on Form 5500 filed
with respect to each Parent Employee Plan (if any such report was required),
(iii) the most recent summary plan description for each Parent Employee Plan for
which such a summary plan description is required (with all summaries of
material modifications provided after the most recent summary plan description
was distributed), (iv) each trust agreement and group annuity contract relating
to any Parent Employee Plan and (v) each favorable determination letter from the
Internal Revenue Service with respect to each Parent Employee Plan that is
intended to be qualified under Section 401(a) of the Code.
(b) All Parent Employee Plans are and have been administered in
material compliance with their terms and all applicable laws, including, without
limitation, ERISA, the Code, and any other applicable law, except where the
failure to so administer the Parent Employee Plans or to comply with such laws
is not reasonably expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. Except as set forth in Schedule 4.16 of the Parent
Disclosure Letter, each Parent Pension Plan intended to be qualified under
Section 401(a) of the Code has received a determination letter (or will receive
a determination letter within the applicable remedial amendment period) or is a
standard prototype plan and continues to satisfy the requirements for such
qualification. Except as set forth in Schedule 4.16 of the Parent Disclosure
Letter, there are no pending or, to Parent's Knowledge, threatened
investigations by any governmental entity, termination proceedings, or other
claims (except claims for benefits payable in the normal operation of the Parent
Employee Plans), suits or proceedings against or involving any Parent Employee
Plan or asserting any rights or claims to benefits under any Parent Employee
Plan that are reasonably expected to result in a liability in excess of $200,000
individually or $1,000,000 in the aggregate.
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(c) All contributions to, and payments from, the Parent Employee
Plans required to be made in accordance with the Parent Employee Plans have been
timely made in accordance with the terms of the Parent Employee Plans and
applicable law; other than contributions or payments the failure of which to
make are not reasonably expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
(d) No Parent Employee Plan is subject to Section 302 or Title
IV of ERISA or Section 412 of the Code or is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA.
(e) (i) No "prohibited transaction" (under Section 4975 of the
Code or Section 406 of ERISA) has occurred with respect to any Parent Employee
Plan, (ii) there has been no breach of any fiduciary duty with respect to any
Parent Employee Plan, and (iii) neither Parent nor any of its subsidiaries has
incurred any excise taxes or penalties with respect to any violation of
applicable law with respect to any Parent Employee Plans, other than, in the
case of (i), (ii), and (iii) those that are not reasonably expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
(f) Neither Parent nor any of its subsidiaries maintains or
contributes to any Parent Employee Plan that could not be terminated by Parent
or any of its subsidiaries without material liability, and neither Parent nor
any of its subsidiaries maintains or contributes to any plan or arrangement
which provides or has any liability to provide life insurance or medical or
other employee welfare benefits to any employee or former employee upon his or
her retirement or termination of employment, except to the extent such benefits
are required to satisfy the minimum requirements under Part 6 of Subtitle B of
Title 1 of ERISA or any similar state law.
(g) Except as set forth on Schedule 4.16 of the Parent Disclosure
Letter or as otherwise provided or contemplated by the terms of this Agreement,
the execution, delivery and performance of, and consummation of the transactions
contemplated by, this Agreement will not (i) entitle any current or former
employee, director, officer, independent contractor, or leased employee of the
Company or any of its subsidiaries to severance pay or any other payment, or
(ii) accelerate the time of payment or vesting of, or increase the amount of,
compensation due any such person.
(h) The consummation of the transactions contemplated by this
Agreement and/or the Stockholders' Agreement will not accelerate the vesting or
exercise date of any options held by employees of Parent or its subsidiaries.
Section 4.17 Tax Treatment. Neither Parent nor, to Parent's Knowledge,
any of its affiliates has taken, has agreed or failed to take, or intends to
take any action or has any Knowledge of any fact or circumstance that would
prevent the Merger from qualifying as a 368 Reorganization if consummated in
accordance with this Agreement.
Section 4.18 Proxy Statement. None of the information to be supplied by
Parent for inclusion in the Proxy Statement or any amendments thereof or
supplements thereto will, at the time of the mailing of the Proxy Statement and
any amendments or supplements thereto, and at the time of the Parent
Stockholders' Meeting (as hereinafter defined), contain any untrue
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statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy Statement
will, as of its mailing date, comply as to form in all material respects with
all applicable laws, including the provisions of the 1934 Act and the rules and
regulations promulgated thereunder, except that no representation is made by
Parent or Merger Subsidiary with respect to information supplied by Weatherford,
WEUS, the Company, or any of their representatives for inclusion therein.
Section 4.19 Parent Stockholders' Approval. The only vote of the
holders of any class or series of Parent's capital stock necessary to approve
and adopt this Agreement, the Merger, the issuance to WEUS of Parent Common
Stock at the Effective Time, and the other transactions contemplated by this
Agreement is (i) the approval of the issuance to WEUS and Venstar or their
affiliates of Parent Common Stock by the affirmative vote of a majority of the
votes cast at a meeting of such stockholders, provided that the total votes cast
on such proposals represents over 50% in interest of all securities entitled to
vote on such proposals, as required by the regulations of the NYSE and (ii)
approval of any amendments to Parent's stock option plan that may be required in
connection with the issuance of the New Options.
Section 4.20 Opinion of Financial Advisor; Board Findings and
Recommendations. The financial advisor of Parent, Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch"), has rendered a written opinion to Parent
to the effect that, as of the date of this Agreement, the consideration to be
received by Parent in the Merger is fair from a financial point of view to
Parent. A copy of such opinion has heretofore been delivered to WEUS. Parent has
been authorized by Merrill Lynch to include such opinion in its entirety in the
Proxy Statement, so long as such inclusion is in form and substance reasonably
satisfactory to Merrill Lynch and its counsel. Parent's Board of Directors (i)
has unanimously approved and adopted this Agreement and the transactions
contemplated hereby, including the Merger and the issuance of Parent Common
Stock contemplated hereby, (ii) has unanimously determined that this Agreement
and the transactions contemplated hereby, including the Merger and the issuance
of Parent Common Stock contemplated hereby, are advisable, fair to and in the
best interests of the stockholders of Parent and (iii) unanimously recommended
(subject to Section 6.13) that the stockholders of Parent approve the issuance
of Parent Common Stock contemplated hereby.
Section 4.21 Brokerage Fees and Commissions. Except for Merrill Lynch,
no broker, finder, or financial advisor has acted directly or indirectly as such
for, or is entitled to compensation from Parent or Merger Subsidiary in
connection with this Agreement or the transactions contemplated hereby. Parent
will be solely responsible for the payment of any and all fees to Merrill Lynch,
and Weatherford and WEUS shall have no liability or responsibility therefor.
Section 4.22 Inapplicability of DGCL Section 203. Parent's Board of
Directors has taken all actions necessary and appropriate to render the
limitations on business combinations contained in Section 203 of the DGCL
inapplicable, as of the date hereof and at all times hereafter, to this
Agreement, the Stockholders' Agreement, the consummation of the Merger, the
issuance to WEUS of Parent Common Stock at the Effective Time, and the other
transactions contemplated hereby and thereby.
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Section 4.23 No Excess Parachute Payments. No amount that could be
received (whether in cash or property or the vesting of property) as a result of
any of the transactions contemplated by this Agreement by any employee, officer,
or director of Parent or any of its subsidiaries who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) would be characterized as an "excess parachute payment" (as such term
is defined in Section 280G(b)(1) of the Code) or would be non-deductible by
reason of Code Section 162(m).
Section 4.24 Certain Business Relationships With Affiliates. No
affiliate of Parent or of any of its subsidiaries (a) owns any property or
right, tangible or intangible, which is used in the businesses of Parent or its
subsidiaries, (b) to the Knowledge of Parent or any of its subsidiaries, has any
claim or cause of action against Parent or any of its subsidiaries, or (c) owes
any money to, or is owed any money by, Parent or any of its subsidiaries.
Schedule 4.24 of the Parent Disclosure Letter describes any material
transactions or relationships between Parent, its subsidiaries, and any
affiliate thereof which have occurred or existed since December 31, 1999.
Section 4.25 Title; Assets. Parent and each of its subsidiaries has
good and indefeasible title to, or a valid interest in, all of its real
property, and good title to, or a valid interest in, all of its compressors and
other material personal property and assets reflected on the Parent Unaudited
Financial Statements as owned or leased by it or otherwise used in its business,
in each case free and clear of all Liens, except for Permitted Encumbrances or
as set forth on Schedule 4.25 of the Parent Disclosure Letter. Except as set
forth in Schedule 4.25 of the Parent Disclosure Letter and except for
obligations created after the date of this Agreement as permitted by this
Agreement, neither Parent nor any of its subsidiaries has any legal obligation,
absolute or contingent, to sell, lease, or otherwise dispose of any of its real
property, compressors, or other material personal property and assets, other
than pursuant to mortgages and security interests incurred in the ordinary
course of business, Permitted Encumbrances, or as disclosed on Schedule 4.25 of
the Parent Disclosure Letter.
ARTICLE V
Covenants of Weatherford, WEUS, and the Company
Section 5.1 Conduct of Business. From the date hereof until the
Effective Time, except as set forth on Schedule 5.1 and Schedule 5.3 of the
Company Disclosure Letter and except as expressly contemplated by this
Agreement, or, except as consented to or approved by Parent in writing (which
consent or approval will not be unreasonably withheld), the Company (and
Weatherford and WEUS solely with respect to paragraph (g)) covenants and agrees
that it will and will cause each of its subsidiaries to:
(a) operate the Business (including the making of capital
expenditures) in the ordinary and usual course of business in all material
respects in accordance with its current business plan and budget delivered to
Parent, including, but not limited to, using its reasonable best efforts to
preserve intact its current business organization, keep its physical assets in
good working condition, and preserve its relationships with customers,
suppliers, and others having business dealings with it to attempt to retain its
goodwill and ongoing business in all material respects;
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(b) not make any change or amendment in the certificate of
incorporation or bylaws of the Company or any of its subsidiaries (or similar
constituent documents of any non-corporate subsidiary including, without
limitation, the Partnership) that would have a material adverse effect on Parent
or Merger Subsidiary;
(c) not issue, sell, or agree to issue or sell (i) any shares of
its capital stock or other ownership interests or (ii) any securities
convertible into, or options with respect to, or warrants to purchase or rights
to subscribe for, any shares of its capital stock or other ownership interests;
(d) except in the ordinary course of business and consistent with
past practices, or as required by this Agreement, by law or contractual
obligations, agreements, or arrangements existing on the date hereof, not (i)
increase in any manner the compensation of, or enter into any new bonus or
incentive agreement or arrangement with, any of its directors, managers,
officers, or other employees, independent contractors, or temporary or leased
employees; (ii) pay or agree to pay any pension, retirement allowance, or other
employee benefit to any such director, manager, officer, employee, independent
contractor, or temporary or leased employee, whether past or present; (iii)
enter into any new, or amend any existing, employment, severance, consulting, or
other compensation agreement with any existing director, manager, officer,
employee, independent contractor, or temporary or leased employee; (iv) commit
itself to any additional pension, profit-sharing, deferred compensation, group
insurance, severance pay, equity compensation, bonus, incentive, retirement, or
other employee benefit plan, fund, or similar arrangement or amend or commit
itself to amend any of such plans, funds, or similar arrangements in existence
on the date hereof; or (v) except (A) as permitted in Section 5.3 or (B) at the
express written request of an employee after providing a copy of such written
request to Parent, transfer the employment of any employees to any employer that
is not the Company or one of its subsidiaries;
(e) except as provided in Section 5.3, not (i) sell, transfer, or
otherwise dispose of any of its material assets (other than pursuant to purchase
options existing on the date hereof), (ii) create or permit to exist any new
material Lien on its assets, other than Permitted Encumbrances, (iii) enter into
any material joint venture, partnership, or other similar arrangement, or form
any other new material arrangement for the conduct of the Business, (iv)
purchase, or agree to purchase, any material assets or securities of any Person,
or (v) enter into any other material agreement (excluding inventory held for
sale and assets manufactured or packaged for sale pursuant to purchase orders or
contracts);
(f) except as provided in Section 5.3, not pay or declare any
dividend on, or make any distribution with respect to, or purchase or redeem any
of, its capital stock or other ownership interests or split, combine, or
reclassify any shares of its capital stock or other ownership interests, other
than dividends or distributions to Weatherford or its subsidiaries in an amount
equal to (i) the undistributed earnings of the GSI Companies prior to the
Effective Time and (ii) the amount of expenses of the Company and its
subsidiaries paid by Weatherford or its subsidiaries (other than the Company or
its subsidiaries), consistent with past practices as previously disclosed to
Parent;
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(g) not take any action that would cause any of the conditions
set forth in Section 8.2(a)(i) not to be satisfied at, or as of any time prior
to, the Effective Time;
(h) not change in any material respect its accounting methods,
principles, or practices, except insofar as may be required by a generally
applicable change in GAAP;
(i) not institute or settle any material claim, suit, or action
involving an amount in excess of $2,000,000 in each case; provided, however,
that this clause shall in no way limit or be deemed to restrict the right of any
Weatherford Entity to institute a claim, suit, or action against Parent or
Merger Subsidiary relating to or arising out of this Agreement or the
transactions contemplated hereby;
(j) not make any payments to, transfer any assets to, or
otherwise enter into any material arrangements with, any affiliate that is not
consistent with past practices;
(k) not amend or terminate the GC Agreement, the Formation
Agreement or the Limited Partnership Agreement or modify or waive any material
condition therein without the prior written consent of Parent, which consent
will not be unreasonably withheld;
(l) (i) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or any of
its subsidiaries, guarantee any debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing, except for (A) borrowings under the Partnership's existing
working capital facility, (B) short-term borrowings or trade obligations
incurred in the ordinary course of business consistent with past practice, or
(C) sale leaseback transactions under the Synthetic Leases as long as the total
principal equivalent obligations under the Synthetic Leases is not more than
$320 million at any time and the proceeds from any future sale leaseback
transaction is used for the purchase, improvements, or acquisition of a capital
asset to be used in the Business that result in a net increase in compression
horsepower of the Company and its subsidiaries or (ii) make any loans, advances
or capital contributions to, or investments in, any other person, other than to
or in the Company or any direct or indirect wholly owned subsidiary of the
Company;
(m) make or agree to make any new capital expenditure or
expenditures in excess of $20,000,000 in the aggregate;
(n) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms or the terms of this Agreement, of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company delivered to Parent or incurred
in the ordinary course of business consistent with past practice, (B) cancel any
material (individually or in the aggregate) indebtedness owed to the Company or
any of its subsidiaries or waive any claims or rights of substantial value; and
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(o) not agree or commit, in writing or otherwise, to take any of
the actions set forth in (b) through (n) above;
provided, however, that nothing in this Section 5.1 shall
prohibit the Company or any of its subsidiaries from consummating, or entering
into any agreements to consummate, (i) acquisitions of assets or businesses of
less than $20,000,000 in the aggregate and (ii) sale leaseback transactions of
less than $20,000,000 in the aggregate.
Section 5.2 Compressor Units. Within seven days from the date hereof,
WEUS shall deliver to Parent a true and complete list as of a recent date of all
compressor units owned or leased by the Company or any of its subsidiaries,
indicating the type of each such compressor and its current location.
Section 5.3 Pre-Closing Transfers and Resignations. (a) Prior to the
Effective Time, (i) the capital stock of the GSI Companies, and all debt of the
GSI Companies owed to the Company and its subsidiaries, the amount of which is
set forth on Schedule 5.3 of the Company Disclosure as of September 30, 2000,
including, without limitation, the assets, business and related employees
associated with the GSI Companies' and the Company and its subsidiaries'
compression sales and rental operations in Malaysia, Vietnam, Oman, Dubai, Ivory
Coast, and Indonesia (excluding, with respect to Australia and Thailand, the
assets physically located in such countries, the contracts related specifically
to work performed in such countries, any accounts receivables for such
contracts, and the employees who are located in such countries or whose
dedicated job is for performance under such contracts, all of which will be
transferred to entities directed by Parent), (ii) all intercompany or other debt
owed by the GSI Companies or by any of the GSI Companies to the Company or any
of its subsidiaries that is in an amount less than $15.9 million (the long-term
intercompany and interdivision balance at September 30, 2000) in the aggregate,
and (iii) such assets as the parties shall mutually agree as described in
Schedule 5.3 of the Company Disclosure Letter ((i), (ii), and (iii) collectively
the "Excluded Assets") shall be transferred or distributed to WEUS or one or
more of its affiliates (other than the Company or its subsidiaries, such
transfers being referred to collectively as the "Transferee") in a manner
reasonably satisfactory to WEUS and Parent, including by purchase at or below
current book value with any cash purchase consideration paid by the Transferee
to be distributed to WEUS. For purposes of this Agreement, any reference to the
Company, the Partnership, the Business or any subsidiaries of the Company shall
not apply to the Excluded Assets. All costs in effecting the above transfers of
the Excluded Assets shall be paid in accordance with Section 12.4(c).
(b) Weatherford shall, at its sole cost and expense:
(i) cause Weatherford Canada Ltd., to transfer 1,100 shares
of Class A capital stock of Weatherford Global Compression Services,
Ltd., to Enterra Compression Investment Company, a Delaware
corporation and a wholly-owned subsidiary of the Company
("Investment");
(ii) transfer one share of Weatherford Global Compression
(Thailand) Ltd. as directed by Parent;
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(iii) cause PhlipCo, Inc. to transfer one share of
Weatherford Global Compression (Thailand) Ltd. as directed by Parent;
(iv) cause Ron Lawrence to transfer one share of Weatherford
Global Compression Services de Venezuela, C.A. as directed by Parent;
(v) cause the other transfers set forth on Schedule 5.1 of
the Company Disclosure Letter to occur; and
(vi) cause all officers and directors of the Company and its
subsidiaries to submit their resignations from such positions
effective as of the Effective Time.
Section 5.4 Restricted Stock. WEUS understands and acknowledges that
the shares of Parent Common Stock to be issued as the Merger Consideration have
not been registered under the 1933 Act, or any similar state laws, and that the
certificate or certificates representing such shares will bear a legend
substantially as follows, as well as any appropriate state "blue sky" legends:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT
BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS SUCH SALE OR TRANSFER
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SUCH ACT.
ARTICLE VI
Covenants of Parent and Merger Subsidiary
Section 6.1 Conduct of Business. From the date hereof until the
Effective Time, except as set forth in Schedule 6.1 of the Parent Disclosure
Letter and except as provided for in, or contemplated by, this Agreement, or,
except as consented to or approved by Weatherford in writing (which consent or
approval will not be unreasonably withheld), Parent covenants and agrees that it
will and will cause each of its subsidiaries to:
(a) operate their businesses (including the making of capital
expenditures) in the ordinary and usual course of business in all material
respects in accordance with its current business plan and budget delivered to
WEUS, including, but not limited to, using its reasonable best efforts to
preserve intact its current business organization, keep its physical assets in
good working condition, and preserve its relationships with customers,
suppliers, and others having business dealings with it to attempt to retain its
goodwill and ongoing business in all material respects;
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(b) not make any change or amendment in their respective
certificate of incorporation or articles of incorporation, as the case may be,
or bylaws that would have a material adverse effect on WEUS;
(c) not issue, sell, or agree to issue or sell (i) any shares of
their capital stock or (ii) any securities convertible into, or options with
respect to, or warrants to purchase or rights to subscribe for, any shares of
their capital stock, except that (A) Parent may issue shares upon conversion of
presently outstanding convertible securities and exercise of presently
outstanding options and as otherwise described in Section 4.2 and (B) Parent may
issue options with an exercise price per share of Parent Common Stock no less
than the fair market value of a share of Parent Common Stock on the effective
date of the grant thereof (and issue shares upon exercise of such options)
pursuant to its employee stock option plans in effect on the date hereof;
provided that the effective date of any option grant shall not be a date prior
to the date of this Agreement;
(d) not (i) sell, transfer, or otherwise dispose of any material
assets (other than pursuant to ordinary course purchase options existing on the
date hereof), (ii) create or permit to exist any new material Lien on its
assets, other than Permitted Encumbrances, (iii) enter into any material joint
venture, partnership, or other similar arrangement, or form any other new
material arrangement for the conduct of their businesses, (iv) purchase, or
agree to purchase, any material assets or securities of any Person, or (v) enter
into any other material agreement, in each case in excess of $20 million
(excluding for purposes of clauses (i) and (iv) only inventory held for sale and
assets manufactured or packaged for sale pursuant to purchase orders or
contracts);
(e) not pay or declare any dividend on, or make any distribution
with respect to, or purchase or redeem any of their capital stock or split,
combine, or reclassify any shares of their capital stock or adopt any rights
plan;
(f) not take any action that would cause any of the conditions
set forth in Section 8.3(a)(i) not to be satisfied at, or as of any time prior
to, the Effective Time;
(g) not change in any material respect its accounting methods,
principles, or practices, except insofar as may be required by a generally
applicable change in GAAP;
(h) not institute or settle any material claim, suit, or action
involving an amount in excess of $2,000,000 in each case; provided, however,
that this clause shall in no way limit or be deemed to restrict the right of
Parent, Merger Subsidiary, or any of their subsidiaries to institute a claim,
suit, or action against Weatherford, WEUS, the Company, or any of its
subsidiaries relating to or arising out of this Agreement or the transactions
contemplated hereby; and
(i) not agree or commit, in writing or otherwise, to take any of
the actions set forth in (b) through (h) above;
provided, however, that nothing in this Section 6.1 shall prohibit Parent or any
of its subsidiaries from consummating, or entering into any agreements to
consummate, (i) acquisitions of assets or businesses of less than $20,000,000 in
the aggregate and (ii) sale leaseback transactions of less than $20,000,000 in
the aggregate.
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Section 6.2 Proxy Statement. Parent shall promptly prepare and file
with the SEC the Proxy Statement. Parent shall promptly take any action required
to be taken under foreign or state securities or Blue Sky laws in connection
with the issuance of Parent Common Stock in the Merger.
Section 6.3 Parent Stockholders' Approvals. Parent shall, as promptly
as practicable, taking into consideration, if applicable, Section 15 of the
Stockholders' Agreement, submit the issuance of Parent Common Stock in the
Merger as required by the NYSE for the approval of its stockholders at a meeting
of its stockholders (the "Parent Stockholders' Meeting") and shall, subject to
Section 6.13, use its reasonable best efforts to obtain stockholder approval
thereof (the "Parent Stockholders' Approval"), it being understood that Parent's
obligations hereunder shall remain unless and until this Agreement has been
terminated and, if required by the terms hereof, the amounts, if any, payable by
Parent pursuant to Section 12.4(c) have been paid to Weatherford or WEUS. Parent
shall, through its Board of Directors subject to Section 6.13, recommend to its
stockholders approval of the issuance of Parent Common Stock in the Merger as
required by the NYSE and shall take all additional actions as the sole
stockholder of the Merger Subsidiary necessary to approve and adopt this
Agreement and the transactions contemplated hereby.
Section 6.4 Stock Exchange Listing. Parent shall use its reasonable
best efforts to cause the shares of Parent Common Stock to be issued in
connection with the Merger and pursuant to the New Options to be listed on the
NYSE, subject to official notice of issuance.
Section 6.5 Employee Benefits. (a) As of the Effective Time, Parent and
Merger Subsidiary shall (or shall cause the Surviving Corporation to) provide to
each individual who was an employee of the Company or its subsidiaries
immediately before the Effective Time (other than the President of the Company
and employees associated with the Excluded Assets (but including employees
wholly associated with the GSI Companies' assets and operations in Australia and
Thailand)) and who becomes an employee of the Surviving Corporation or its
subsidiaries as of the Effective Time (a "Transferred Employee") with a level of
employee benefits that is substantially comparable in the aggregate (i) to the
benefits provided to employees of Parent and its subsidiaries in comparable
positions or (ii) to the benefits provided to such Transferred Employees
immediately prior to the Effective Time.
(b) From and after the Effective Time and for all purposes
(including without limitation, eligibility, vesting, and benefit accrual) under
all Parent Employee Plans (including without limitation the Company Benefit
Plans that become Parent Employee Plans at the Effective Time), each Transferred
Employee shall receive full credit from Parent, Merger Subsidiary, in which the
Transferred Employee is eligible to participate, the Surviving Corporation, and
any other affiliates of Parent for all prior service properly credited under the
Company Benefit Plans; provided, however, that Parent, Merger Subsidiary, the
Surviving Corporation, and any other affiliates of Parent shall not be required
to credit any Transferred Employee with prior service for purposes of benefit
accrual or contributions under any Parent Employee Plan that is a defined
benefit pension plan.
(c) The Company and its subsidiaries shall cease to participate
in the Weatherford International, Inc. 401(k) Savings Plan (the "Weatherford
401(k) Plan")
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immediately prior to the Effective Time. If WEUS determines (in its sole
discretion) that a distribution is permissible from the Weatherford 401(k) Plan
under Section 401(k) of the Code in connection with the transactions
contemplated by this Agreement, Parent and Merger Subsidiary shall cause a
Parent Employee Plan that is a tax-qualified defined contribution plan that is a
Parent Employee Plan or that is maintained by the Surviving Corporation or a
subsidiary thereof (the "Parent 401(k) Plan") to accept a direct rollover of the
portion of a Transferred Employee's distribution which Parent determines (in its
sole discretion) constitutes an eligible rollover distribution, including
without limitation, an in-kind rollover of any outstanding loans and related
promissory notes. If WEUS determines in accordance with the foregoing that a
distribution is not permissible under Section 401(k) of the Code, then WEUS and
Parent agree to effect a plan-to-plan transfer of the account balances and
related liabilities of the Transferred Employees from the Weatherford 401(k)
Plan to the Parent 401(k) Plan, except to the extent permitted by Treasury
Regulation Section 1.411(d)-4, Q&A-3(b), Transferred Employees are eligible to
choose to retain their account balances in the Weatherford 401(k) Plan (and to
the extent Transferred Employees elect to so retain their account balances).
Such a transfer (if any) shall occur, on or as soon as reasonably practicable
after the Effective Time. To implement such a transfer (if any), WEUS shall
direct the trustee of the Weatherford 401(k) Plan to transfer to the trustee or
funding agent of the Parent 401(k) Plan an amount in cash equal in value to the
account balances of the Transferred Employees as of the date of the transfer
(other than any such employees who are permitted in accordance with the
foregoing by WEUS to elect, and who so elect, to retain such account balances in
the Weatherford 401(k) Plan); provided that to the extent the account balances
to be transferred consist in whole or in part of outstanding participant loans,
WEUS shall direct the trustee of the Weatherford 401(k) Plan to transfer to the
trustee or funding agent of the Parent 401(k) Plan, in lieu of cash, the
promissory notes and related documents evidencing such loans. Such plan-to-plan
transfers shall be conditioned upon the receipt by each party of customary
representations and warranties as to the tax-qualified status of each relevant
plan and trust. In connection with such transfers, WEUS and Parent shall take
all action reasonably necessary to effect any required governmental filings.
(d) Subject to the following sentence, Parent shall amend or
cause to be amended each Parent Welfare Plan (including without limitation the
Partnership Benefit Plans that become Parent Welfare Plans at the Effective
Time) so that from and after the Effective Time (i) no such plan contains any
restrictions for pre-existing conditions or requirements for evidence of
insurability with respect to the Transferred Employees and (ii) for purposes of
determining satisfaction of deductibles, out-of-pocket maximums, and similar
limitations under such Parent Welfare Plans, Transferred Employees shall receive
credit under each such plan for payments under a deductible limit made by them
and for out-of-pocket maximums and similar limits applicable to them for the
relevant plan year in which the Effective Time occurs under the applicable
Company Welfare Plans in which they participated immediately prior to the
Effective Time. Parent shall not be required to amend or cause to be amended a
Parent Welfare Plan with respect to (i) above to remove restrictions for
pre-existing conditions or requirements for evidence of insurability with
respect to Transferred Employees not provided such coverage under Company
Benefit Plans due to restrictions for pre-existing conditions or requirements
for evidence of insurability under Company Benefit Plans; in addition, in the
case of an insured Parent Welfare Plan, Parent shall have met its obligation
under (i) above with respect to such plan if Parent uses its reasonable best
efforts to (x) amend or cause to be amended such plan accordingly, (y) obtain a
waiver of such restrictions for pre-existing conditions or requirements
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for evidence of insurability, or (z) retain such coverage under a Company
Benefit Plan that becomes a Parent Welfare Plan, regardless of whether such
amendment, waiver or coverage is obtained.
(e) To the extent a Transferred Employee becomes eligible for
severance benefits under an existing written plan or agreement on or after the
Effective Time or as a result of the transactions contemplated by this Agreement
(whether under a Company Benefit Plan or a Parent Employee Plan), such benefits
shall be paid by Parent, an affiliate of Parent, or a Parent Employee Plan, and
WEUS and its affiliates shall have no liability for any such severance benefits.
(f) The shares of Parent Common Stock to be issued pursuant to
the options issued pursuant to Section 6.5(k) shall be covered by an effective
registration statement on Form S-8 or Form S-4 as of the date of issuance.
(g) In the event Parent or Merger Subsidiary or any successors
and assigns of either (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets relating to the Surviving Corporation to any Person, then,
and in each case, proper provision shall be made so that such successors and
assigns of Parent or Merger Subsidiary honor the obligations of Parent and
Merger Subsidiary set forth in this Section 6.5.
(h) Nothing in this Agreement, express or implied, shall confer
upon any Transferred Employee or any other employee of the Company or an
affiliate thereof or upon any representative of such employee, or upon any
person claiming through such employee, or upon any collective bargaining agent,
any rights or remedies, including any right to employment or continued
employment for any specified period, of any nature or kind whatsoever. Nothing
in this Agreement, express or implied, shall be deemed to confer upon any
individual (or any beneficiary thereof) any rights under or with respect to any
plan, program, or arrangement described in or contemplated by this Agreement,
and each individual (and any beneficiary thereof) shall be entitled to look only
to the express terms of any such plan, program, or arrangement for his or her
rights thereunder. Nothing in this Agreement, express or implied, shall create a
third party beneficiary relationship or otherwise confer any benefit,
entitlement, or right upon any person or entity other than the parties hereto.
Nothing in this Agreement shall cause duplicate benefits to be paid or provided
to or with respect to a Transferred Employee under any employee benefit
policies, plans, arrangements, programs, practices, or agreements (including any
Company Benefit Plan).
(i) References herein to a benefit with respect to a Transferred
Employee shall include, where applicable, benefits with respect to any eligible
dependents and beneficiaries of such Transferred Employee under the same
employee benefit policy, plan, arrangement, program, practice, or agreement.
(j) Weatherford, WEUS, the Company, and Parent shall provide each
other with such information, notices, and schedules as may be reasonably
requested to effect the
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matters set forth in this Section 6.5. All such information and notices and
schedules to be provided hereunder shall be true, correct and complete as of the
date provided.
(k) As of the Effective Time, Parent shall grant stock options
for shares of Parent Common Stock pursuant to Parent's Incentive Stock Option
Plan to each individual listed on Schedule 3.16 of the Company Disclosure Letter
who is a Transferred Employee in an amount equal to the number of unvested
Employee Options as of the Effective Time based upon the information set forth
opposite such Transferred Employee's name on Schedule 3.16 of the Company
Disclosure Letter, at an option price per share equal to Fair Market Value (as
determined under Parent's Incentive Stock Option Plan) and subject to such other
standard option terms called for under Parent's Incentive Stock Option Plan and
otherwise generally applicable to stock option grants pursuant to Parent's
Incentive Stock Option Plan. If an individual is listed on Schedule 3.16 of the
Company Disclosure Letter but is not a Transferred Employee, such individual
will not be entitled to any stock option grant pursuant to the preceding
sentence.
Section 6.6 Corporate Name; Trademark Rights. (a) Within 30 days
following the Effective Time, Parent will use its best efforts to cause the
Surviving Corporation and each of its subsidiaries to cease to use the name
"WEUS" or "Weatherford" or any similar names (except as permitted under the
Transitional Services Agreement), and Parent will take all action, including
causing the Surviving Corporation and each of its subsidiaries to file all
documents, necessary to change the name of the Surviving Corporation and each of
its subsidiaries to a name that does not use the name "WEUS" or "Weatherford."
(b) Parent understands and agrees that nothing in this Agreement
confers upon Parent or the Surviving Corporation any rights to or under any
trademarks, service marks, logos, or trade names of the Weatherford Entities, or
any of their affiliates ("Marks"). Parent agrees that, upon the Effective Time,
Parent will cause the Surviving Corporation and each of its subsidiaries to
cease all use of the Marks, including, without limitation, any name including
the word "WEUS" or "Weatherford," the "WEUS logo" or the "Weatherford logo," and
all marks, names, and trade styles confusingly similar to such word and symbol.
Parent further agrees that it will, as promptly as practicable and in any event
within 180 calendar days following the Effective Time, cause the Surviving
Corporation and its subsidiaries to remove all references to and representations
of any of the Marks from the properties of the Surviving Corporation and its
subsidiaries.
Section 6.7 Registration Rights Agreement. Parent will enter into a
Registration Rights Agreement with WEUS at the Effective Time in the form
attached hereto as Exhibit B (the "Registration Rights Agreement").
Section 6.8 Transitional Services Agreement and Voting Agreement. The
Partnership will enter into a Transitional Services Agreement with Weatherford
at the Effective Time substantially in a form attached hereto as Exhibit C,
which will include such reasonable services and fees as shall be mutually agreed
by Parent and Weatherford, and WEUS will enter into a Voting Agreement with
Parent at the Effective Time in the form attached hereto as Exhibit G (the
"Voting Agreement").
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Section 6.9 Representation on Parent's Board of Directors. (a) The
Board of Directors of Parent shall take such action as may be necessary to
increase the size of Parent's Board of Directors immediately following the
Effective Time from eight members to eleven members and shall cause to be
appointed to the Board of Directors of Parent immediately after the Effective
Time three nominees (together, the "Weatherford Nominees") selected by WEUS. One
Weatherford Nominee shall be appointed as a Class A director with a term of
office expiring in 2001, one Weatherford Nominee shall be appointed as a Class B
director with a term of office expiring in 2002, and one Weatherford Nominee
shall be appointed as a Class C director with a term of office expiring in 2003.
After such appointments, the Board of Directors shall cause the Weatherford
Nominees, or any other Persons nominated by WEUS in place of the Weatherford
Nominees, to stand for election to the Board of Directors of Parent at Parent's
next succeeding Annual Meeting of Stockholders following the expiration of their
respective terms of office. At each Annual Meeting of Stockholders of Parent,
the Board of Directors shall nominate the Weatherford Nominees whose term of
office is then expiring (or such other Weatherford Nominees as are nominated by
WEUS) to stand for election to the Board of Directors of Parent, and Parent
shall support the election of such Person.
(b) Notwithstanding anything to the contrary contained herein,
if WEUS ever directly or indirectly beneficially owns (including ownership by
any affiliate of WEUS) in the aggregate less than 20% of the shares of
outstanding Parent Common Stock, Parent's obligations under this Section 6.9
shall only apply with respect to two nominees selected by WEUS for Parent's
Board of Directors.
(c) Notwithstanding anything to the contrary contained herein,
if WEUS ever directly or indirectly beneficially owns (including ownership by
any affiliate of WEUS) in the aggregate less than 10% of the shares of
outstanding Parent Common Stock, the obligations of Parent and the rights of
WEUS under this Section 6.9 shall terminate.
Section 6.10 Retention by WEUS. Parent agrees that WEUS and its
affiliates may retain (a) copies of all consolidating and consolidated financial
information and all other accounting books and records prepared or used in
connection with the preparation of financial statements of the Company, its
subsidiaries or any of their affiliates; provided that WEUS and its affiliates
shall keep all of such information strictly confidential but only to the extent
required to be kept confidential under Section 7.7, and (b) all Retained E-mail
(as defined in Section 12.17).
Section 6.11 Record Preservation by Parent and Surviving Corporation.
Parent agrees that it shall, and shall cause the Surviving Corporation to,
preserve and keep all books and records relating to the Business and operations
of the Company and its subsidiaries on or before the Effective Time in Parent's
or the Surviving Corporation's possession for a period of at least six years
from the Effective Time. After such six-year period, before Parent or the
Surviving Corporation may dispose of any such books and records, at least 30
calendar days' prior notice to such effect shall be given by Parent or the
Surviving Corporation to WEUS or any other affiliate designated by WEUS, and
WEUS or its designee shall be given an opportunity, at its cost and expense, to
remove and retain all or any part of such books and records of which Parent or
the Surviving Corporation elects to dispose. Notwithstanding the foregoing,
Parent agrees that it shall, and shall cause the Surviving Corporation to,
preserve and keep all books and records of the Company and its subsidiaries
relating to any Action of which Parent has Knowledge if it is
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reasonably likely that such Action may relate to matters occurring prior to the
Effective Time, without regard to the six-year period set forth in this Section
6.11.
Section 6.12 Merger Subsidiary. Parent has provided the Company with
separate financial information regarding Merger Subsidiary.
Section 6.13 No Solicitation. (a) From the date hereof until the
Effective Time, Parent shall not, nor shall it permit any of its subsidiaries
to, nor shall it authorize or permit any of its directors, officers, or
employees, or any investment banker, financial advisor, attorney, accountant, or
other representative retained by it or any of its subsidiaries (the
"Representatives") to, directly or indirectly through another Person, (i)
solicit or initiate (including by way of furnishing information), or take any
other action designed and intended to facilitate or encourage, any inquiries or
the making of any proposal that constitutes any Takeover Proposal (as defined
below), (ii) participate or engage in any discussions or negotiations regarding
any Takeover Proposal, or (iii) disclose any nonpublic information relating to
Parent or any of its subsidiaries to any Person in connection with any Takeover
Proposal; provided, however, that in the case of (ii) and (iii) only, if, at any
time prior to obtaining the Parent Stockholders' Approval, the Board of
Directors of Parent determines in good faith, (i) after consulting with and
receiving the advice of outside counsel, that it is necessary to do so in order
to comply with its fiduciary duties to Parent's stockholders under applicable
law and (ii) based on the advice of Parent's financial advisors, that a Takeover
Proposal is a Superior Proposal (as defined below), then Parent may, in response
to a bona fide written Takeover Proposal that was not solicited by it, and
subject to compliance with Section 6.13(c), (x) furnish information with respect
to Parent and its subsidiaries to any Person submitting such Takeover Proposal,
provided such information is furnished pursuant to an existing confidentiality
agreement or a confidentiality agreement with terms no less favorable to Parent
than those contained in the Confidentiality Agreement (as hereinafter defined)
(which agreement Parent is hereby permitted to enter into) and (y) participate
in discussions or negotiations regarding such Takeover Proposal. For purposes of
this Agreement, "Takeover Proposal" means any inquiry, proposal, or offer from
any Person relating to any direct or indirect acquisition or purchase of 15% or
more of the assets of Parent and its subsidiaries or 15% or more of any class of
equity securities of Parent or any of its subsidiaries, any tender offer or
exchange offer that if consummated would result in any Person beneficially
owning 15% or more of any class of equity securities of Parent or any of its
subsidiaries, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution, or similar transaction involving
Parent or any of its subsidiaries, in all cases other than the transactions
contemplated by this Agreement.
(b) Except as expressly permitted by this Section 6.13, neither
the Board of Directors of Parent nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Weatherford, WEUS, or the Company, the approval or recommendation by such Board
of Directors or such committee of this Agreement, the Merger, the issuance of
the shares of Parent Common Stock called for hereby, or the other transactions
contemplated hereby, (ii) approve or recommend, or propose publicly to approve
or recommend, any Takeover Proposal, or (iii) cause Parent or any of its
subsidiaries to enter into any letter of intent, agreement in principle,
acquisition agreement, or other similar agreement, or fee arrangement, or other
agreement (each, an "Acquisition Agreement") related to any Takeover Proposal.
Notwithstanding the foregoing, if prior to receiving the Parent Stockholders'
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Approval, the Board of Directors of Parent receives an unsolicited Takeover
Proposal and the Board of Directors determines in good faith (i) after receiving
the advice of Parent's financial advisors, that such Takeover Proposal
constitutes a Superior Proposal, and (ii) after consulting with and receiving
the advice of outside counsel, that it is consistent with its fiduciary duties
to Parent's stockholders under applicable law to do so, the Board of Directors
of Parent may (x) withdraw or modify its approval or recommendation of the
issuance of the shares of Parent Common Stock called for hereby, (y) approve or
recommend such Superior Proposal, or (z) terminate this Agreement and
concurrently with or after such termination, if it so chooses, cause Parent to
enter into any Acquisition Agreement with respect to any Superior Proposal
subject to payment of the amounts set forth in Section 12.4(c) prior to or
concurrently with the termination hereof, but only (as to (x), (y), and (z)) (i)
if Parent has complied with all of the provisions of this Section 6.13 and (ii)
if such action is taken at a time that is after the third Business Day following
Weatherford's receipt of written notice from Parent advising Weatherford that
the Board of Directors of Parent has received a Superior Proposal, specifying
the material terms and conditions of such Superior Proposal and identifying the
Person making such Superior Proposal. For purposes of this Agreement, a
"Superior Proposal" means any bona fide written Takeover Proposal (provided that
for purposes of this definition the references to 15% in the definition of the
term "Takeover Proposal" shall be deemed to be references to "50%") made by a
Third Party on terms that, taking into account all the terms and conditions of
such proposal (including price and expected timing of consummation), would, if
consummated, result in a transaction that is more favorable to Parent's
stockholders (in their capacity as stockholders) from a financial point of view,
than the transactions contemplated by this Agreement and for which financing, to
the extent required, is then committed or reasonably likely to be committed.
(c) In addition to the obligations of Parent set forth in
paragraphs (a) and (b) of this Section 6.13, Parent shall immediately (within 24
hours) advise Weatherford of any Takeover Proposal, including the material terms
and conditions known to Parent of such Takeover Proposal, a copy of any offer or
other written communications, and the identity of the Person making such request
or Takeover Proposal. Parent shall keep Weatherford reasonably informed of the
status of any such request or proposal and of any discussions and negotiations
in relation thereto.
(d) Nothing contained in this Section 6.13 shall prohibit Parent
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to
Parent's stockholders if, in the good faith judgment of the Board of Directors
of Parent, based upon the advice of outside counsel, failure to make such
disclosure would be a breach of its fiduciary duties to Parent's stockholders
under applicable law.
Without the prior consent of Weatherford, Parent shall not,
except to the extent contemplated by this Agreement, release any Person from any
confidentiality or standstill agreement to which Parent is a party if such
action would have the purpose or effect of permitting or facilitating the
submission of a Takeover Proposal by such Person. Immediately upon the execution
of this Agreement, Parent shall, and Parent shall cause its subsidiaries and
Representatives to, cease and cause to be terminated all activities,
discussions, and negotiations, if any, with any Person conducted prior to the
date hereof with respect to, or seeking to obtain, any Takeover Proposal.
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(e) Notwithstanding anything in this Agreement to the contrary,
Parent's Board of Directors shall be permitted, at any time prior to obtaining
the Parent Stockholders' Approval, to withdraw, modify, or change, or propose to
withdraw, modify, or change, the recommendation by the Board of Directors of the
issuance of Parent Common Stock in the Merger if, after consulting with and
receiving the advice of outside counsel, Parent's Board of Directors concludes
in good faith that failure to take such action would result in a breach by
Parent's Board of Directors of its fiduciary obligations under applicable law.
Section 6.14 Parent Financial Statements. (a) Until the earlier of (i)
that date that Weatherford is no longer required to include Parent's financial
results in Weatherford's consolidated financial statements or SEC filings or
(ii) such time as Weatherford agrees otherwise, Parent covenants and agrees to
annually provide to Weatherford the audited financial statements of Parent on or
before 75 days after Parent's fiscal year end.
(b) Parent covenants and agrees for so long as Weatherford is
required to include Parent's financial results in Weatherford's consolidated
financial statements or SEC filings to cause its independent public accountants
to provide Weatherford with any and all assistance reasonably requested by
Weatherford in connection with the inclusion of Parent's financial statements in
any of Weatherford's filings with the SEC, including, without limitation,
providing of written consents, opinion letters, and comfort letters.
ARTICLE VII
Covenants of Parent and the Company
Section 7.1 Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper, or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
Section 7.2 Certain Filings. (a) The Company and Parent shall cooperate
with one another (i) in connection with the preparation of the Proxy Statement,
(ii) in determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals, or
waivers are required to be obtained from parties to any material agreements, in
connection with the consummation of the transactions contemplated by this
Agreement, and (iii) in taking such actions or making such filings, furnishing
information required in connection therewith and seeking timely to obtain such
actions, consents, approvals, or waivers.
(b) If not previously filed by Parent and the Company, within ten
Business Days after the date hereof Parent and the Company will make such
filings as may be required by the HSR Act with respect to the consummation of
the transactions contemplated by this Agreement, will request early termination
of any waiting period under the HSR Act, and will use all reasonable efforts to
obtain early termination of any such waiting period. Parent and the Company will
file or cause to be filed as promptly as practicable with the United States
Federal Trade Commission ("FTC") and the United States Department of Justice
("Justice Department") any supplemental information which may be requested
pursuant to the HSR Act. All filings
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referred to in this Section 7.2(b) will comply in all material respects with the
requirements of the respective laws pursuant to which they are made. Each party
shall pay its own fees in connection with the filing(s) by such party under the
HSR Act.
(c) Without limiting the generality or effect of Section 7.2(b),
and notwithstanding any provision herein to the contrary, each of the parties
will (i) use reasonable commercial efforts to comply as expeditiously as
possible with all lawful requests of Governmental Authorities for additional
information and documents pursuant to the HSR Act, (ii) not (A) extend any
waiting period under the HSR Act or (B) enter into any voluntary agreement with
any Governmental Authorities not to consummate the transactions contemplated by
this Agreement, except with the prior consent of the other, and (iii) cooperate
with each other and use reasonable efforts to obtain the requisite approval of
the FTC and Justice Department, including, without limitation, (A) entering into
negotiations, providing information, making proposals, entering into reasonable
agreements and performing such agreements to divest of assets or properties,
hold separate (through the establishment of a trust or otherwise) particular
assets, categories of assets, or businesses, or agreeing to dispose of one or
more assets or properties, in each case as may be necessary to secure the
expiration or termination of the applicable waiting periods under the HSR Act,
(B) use commercially reasonable efforts, but not beyond complying with a second
request for information from the Department of Justice (including taking the
steps contemplated under clause (A)) to prevent the entry in a judicial or
administrative proceeding brought under any antitrust law by any Governmental
Authority or any other party for a permanent or preliminary injunction or other
order that would make consummation of the transactions contemplated by this
Agreement unlawful or that would prevent or delay such consummation, (C) take
promptly any and all commercially reasonable steps, including filing an appeal,
the posting of a bond, or the steps contemplated by clause (A), necessary to
obtain the removal, dissolution, stay, or dismissal of any temporary restraining
order, preliminary injunction, or other judicial or administrative order which
prevents the consummation of the transactions contemplated by this Agreement or
requires as a condition thereto that all or any part of the Business be held
separate, or (D) pursuing any necessary litigation or administrative proceedings
(including, if necessary, participation in proceedings through the trial court
level).
Section 7.3 Public Announcements. Without the prior consent of the
other, which consent shall not be unreasonably withheld, neither Parent nor the
Company nor their affiliates will issue, or permit any agent or affiliate to
issue, any press releases or otherwise make or permit any agent or affiliate to
make, any public statements with respect to this Agreement or the transactions
contemplated by this Agreement, in each case except as maybe required by law.
Section 7.4 Further Assurances. (a) At and after the Effective Time,
the officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments, or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect, or confirm of record or otherwise (i) in
the Surviving Corporation any and all right, title, and interest in, to, and
under any of the rights, properties, or assets of the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger and (ii) in WEUS or its affiliates any and all right, title, and interest
in, to, and under any of the Excluded Assets.
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(b) In case at any time after the Effective Time any further
action is necessary to carry out the purposes and intent of this Agreement and
the transactions contemplated hereby, or to transfer to the Surviving
Corporation any assets of the Business (excluding the Excluded Assets, and the
assets that have been transferred as disclosed on Schedule 3.7 and Schedule 5.1
of the Company Disclosure Letter) that are both (i) either (A) reflected on the
balance sheet included in the Partnership Unaudited Financial Statements or (B)
paid for by the Company or its subsidiaries since the Partnership Unaudited
Balance Sheet Date and (ii) held in the name and control of Weatherford, WEUS,
or their affiliates after the Effective Time, WEUS and Parent each agree, on
behalf of itself and its affiliates, to take or cause to be taken such further
action (including the execution and delivery of such further instruments and
documents) as the other reasonable may request.
Section 7.5 Notices of Certain Events. Each of the Company and Parent
shall promptly notify the other party hereto of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
(c) any actions, suits, claims, investigations, or proceedings
commenced or, to its Knowledge, threatened against, relating to, or involving,
or otherwise affecting such party that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Sections
3.8, 3.11, 3.14, 3.15, 4.9, 4.12, 4.14, or 4.15 (as the case may be) or that
relate to the consummation of the transactions contemplated by this Agreement;
and
(d) (i) the discovery by such party that any representation or
warranty contained in this Agreement is untrue or inaccurate in any material
respect, (ii) the occurrence or failure to occur of any event which occurrence
or failure to occur would be reasonably likely to cause any of the
representations or warranties in this Agreement to be untrue or incorrect in any
material respect at the Effective Time, except for representations and
warranties that speak as of a specified date, which need only be true and
correct as of the specified date, and (iii) any material failure on its part to
comply with or satisfy any covenant, condition, or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 7.5(d) shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 7.6 Tax-Free Reorganization. Prior to, through, and subsequent
to the Effective Time, each party shall use its reasonable best efforts to cause
the Merger to qualify as a 368 Reorganization and will not take or fail to take
any action reasonably likely to cause the Merger not to so qualify.
Section 7.7 Access to Information; Confidentiality. (a) From the date
hereof until the Effective Time, the Company and its subsidiaries, on the one
hand, and Parent, on the other hand, (i) will give to the other party, its
counsel, financial advisors, auditors, and other
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authorized representatives reasonable access, during regular business hours and
upon reasonable advance notice, to the employees, offices, properties, books,
and records of such party, in each case as the other party may reasonably
request and (ii) furnish to the other party and its representatives such
financial and other data and information as the other party and its
representatives may reasonably request. The foregoing shall not include
information that is not germane to the transactions contemplated hereby,
information regarding any sale or merger or combination of WEUS, the Company, or
any of its subsidiaries (whether as a sale of assets or ownership interests) to
or with any Person other than Parent or Merger Subsidiary, or information
prepared by Weatherford, WEUS, the Company or any of its subsidiaries (or any of
their respective representatives) relating to this Agreement or the transactions
contemplated hereby. A party shall have the right to have a representative
present at all times of any inspections, interviews, or examinations conducted
at the offices or facilities or on the properties of such party. The Company and
its subsidiaries, on the one hand, and Parent, on the other hand, will instruct
their respective employees and representatives to cooperate with the other party
in its investigations; provided, however, that any access or disclosure of the
type contemplated in this Section 7.7 which, in the reasonable judgment of the
party asserting such denial, would operate to cause the waiver of any
attorney-client, work product, or other privilege or result in the violation of
an obligation or agreement of confidentiality may be denied. Each party further
agrees that if the other party inadvertently furnishes such party with
information or access not required in accordance with the preceding sentence,
such party will, upon the other party's request, promptly return same to the
other party together with any and all extracts therefrom or notes pertaining
thereto (whether in electronic or other format). In addition, Parent shall only
have access to, and the Company and its subsidiaries shall only be required to
provide Parent with access to, Retained E-mail to the extent set forth in
Section 7.9. Any investigation pursuant to this Section 7.7 shall be conducted
in such manner as not to interfere unreasonably with the conduct of the business
of the Company and its subsidiaries, on the one hand, and Parent, on the other
hand, as the case may be, and no investigation pursuant to this Section 7.7
shall affect any representation or warranty made by any party hereunder. Each
party shall indemnify, defend, and hold harmless the other (including its
affiliates) from and against any losses asserted against or suffered by the
other party relating to, resulting from, or arising out of examinations or
inspections made by such party or its authorized representatives pursuant to
this Section 7.7.
(b) All information obtained by Parent, on the one hand, or the
Company and its subsidiaries, on the other hand, pursuant to this Section 7.7
shall be kept confidential in accordance with, and shall otherwise be subject to
the terms of, the Confidentiality Agreement dated June 15, 2000 between Parent
and Weatherford (the "Confidentiality Agreement"). In addition, Parent agrees
that if the information (whether in electronic mail format, on computer hard
drives, or otherwise) held by the Company and its subsidiaries at the Effective
Time includes information that relates to the business operations or other
strategic matters of WEUS or its affiliates (other than the Company or its
subsidiaries), such information shall be held in confidence on the terms and
subject to the conditions contained in the Confidentiality Agreement, but the
term of the restriction on the disclosure and use of such information shall
continue in effect as to such information for a period of two years from the
Effective Time; provided, however, this sentence shall not apply to information
relating solely to the business operations or strategic matters of the Company
and its subsidiaries.
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Section 7.8 Proxy Statement. Parent and the Company shall promptly
furnish to each other all information, and take such other actions, as may
reasonably be requested in connection with any action by any of them in
connection with the preparation and filing of the Proxy Statement. The
information provided and to be provided by Parent and the Company, respectively,
for use in the Proxy Statement shall be true and correct in all material
respects without omission of any material fact which is required to make such
information not false or misleading as of the date thereof and in light of the
circumstances under which given or made.
Section 7.9 Cooperation After the Effective Time. WEUS and Parent each
agree that it will cooperate with and make available to the other, during normal
business hours, all books and records, information, and employees (without
substantial disruption of employment) retained and remaining in existence after
the Effective Time which are necessary or useful in connection with (a) any Tax
inquiry, audit, investigation or dispute, (b) any litigation or investigation,
or (c) any other matter requiring any such books and records, information, or
employees for any reasonable business purpose, provided that (i) with respect to
providing Parent access to Retained E-Mail, WEUS shall provide access to Parent
upon Parent's request and shall furnish Parent with copies of only those
portions of the Retained E-Mail that pertain or relate to the Company and its
subsidiaries and the Business and (ii) neither party shall be required by this
Section 7.9 to make available to the other any information referred to in the
third sentence of Section 7.7(a). The party requesting any such books and
records, information, or employees shall bear all of the out-of-pocket costs and
expenses (including attorneys' fees) reasonably incurred in connection with
providing such books and records, information, or employees. WEUS may require
certain financial information relating to the Company and its subsidiaries or
the Business for periods prior to the Effective Time for the purpose of filing
federal, state, local, and foreign Tax Returns, and other governmental reports,
and Parent agrees to furnish, and to cause the Surviving Corporation to furnish,
such information to WEUS at WEUS's request and expense.
Section 7.10 Non-Solicitation of Employees.
(a) For a period of 12 months after the Effective Time,
Weatherford, WEUS and their affiliates shall not, without the prior written
consent of Parent, directly or indirectly, solicit (other than pursuant to
general solicitations of employees not directed specifically at an employee of
Parent or its subsidiaries), encourage, induce, or permit any employee of Parent
or its subsidiaries to become an employee, contractor, or consultant of
Weatherford, WEUS or any of their affiliates; provided, however, that the
foregoing shall not prohibit Weatherford, WEUS, and their affiliates from
employing or contracting with any employee of Parent or its subsidiaries who
contacts Weatherford, WEUS, or their affiliates for employment.
(b) For a period of 12 months after the Effective Time, Parent
and its subsidiaries shall not, without the prior written consent of
Weatherford, directly or indirectly, solicit (other than pursuant to general
solicitations of employees not directed specifically at an employee of
Weatherford, WEUS or their affiliates), encourage, induce, or permit any
employee of Weatherford, WEUS or their affiliates to become an employee,
contractor, or consultant of Parent or any of its subsidiaries; provided,
however, that the foregoing shall not prohibit Parent and its subsidiaries from
employing or contracting with any employee of Weatherford, WEUS, or their
affiliates who contacts Parent or its subsidiaries for employment.
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Section 7.11 Adjustment Payments. Parent and the Company agree that as
of the Effective Time, they shall prepare a schedule of the individuals listed
on Schedule 3.16 of the Company Disclosure Letter who are Transferred Employees.
Promptly after the special retention date for each Transferred Employee
specified opposite his or her name on Schedule 3.16, Weatherford will pay each
Transferred Employee his or her applicable Adjustment Payment. For each
Transferred Employee who remains continuously employed with the Parent or one of
its subsidiaries through his or her applicable special retention date, Parent
shall make an Adjustment Payment to Weatherford within 10 days after such
special retention date. For any such Transferred Employee whose employment with
Parent or one of its subsidiaries is terminated by Parent or one of its
subsidiaries prior to his or her applicable special retention date other than
for cause, Parent shall make a payment to Weatherford equal to 50% of the
applicable Adjustment Payment for such Transferred Employee. There shall be no
Adjustment Payment with respect to a special retention date for any Transferred
Employee who voluntarily terminates his or her employment with Parent or one of
its subsidiaries prior to such special retention date.
ARTICLE VIII
Conditions to the Merger
Section 8.1 Conditions to the Obligations of Each Party. The
obligations of WEUS, the Company, Parent, and Merger Subsidiary to consummate
the Merger are subject to the satisfaction of the following conditions:
(a) the Parent Stockholders' Approval of the issuance of the
shares of Parent Common Stock as contemplated hereby shall have been received in
accordance with applicable NYSE listing requirements and all applicable legal
requirements;
(b) any applicable waiting periods under the HSR Act and the
Competition Act (Canada) relating to this Agreement, the Merger, and the other
transactions contemplated hereby shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no
judgment, injunction, order, or decree shall prohibit the consummation of the
Merger;
(d) the shares of Parent Common Stock to be issued in the Merger
shall have been approved for listing on the NYSE, subject to official notice of
issuance;
(e) all conditions to the GC Acquisition, as set forth in the GC
Agreement, shall have been satisfied or waived, and such transaction shall close
contemporaneously with the Merger;
(f) the issuance of the Parent Common Stock in the Merger shall
be exempt from the registration requirements of the 1933 Act, it being
understood and acknowledged by WEUS that the certificates representing such
stock shall bear a restrictive legend stating that such stock was not received
in a transaction registered under the 1933 Act;
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(g) Parent shall have consummated financing reasonably acceptable
to both Parent and Weatherford sufficient to amend or refinance (i) Parent's and
Merger Subsidiary's 9 7/8% Senior Discount Notes, revolving credit facility and
operating lease facility, (ii) the Partnership's current working capital
facility and Master Letter of Credit Agreement with ABN Amro and the Synthetic
Leases and (iii) such other indebtedness as Parent and Weatherford shall
reasonably agree;
(h) the Services Agreement (as defined in Section 12.17) shall
have been terminated and replaced by the Transitional Services Agreement, in a
form to be mutually agreed upon by WEUS and Parent; and
(i) the Parent Average Price shall not be less than $25.00.
Section 8.2 Conditions to the Obligations of Parent and Merger
Subsidiary. The obligations of Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further conditions:
(a) (i) all representations and warranties of Weatherford, WEUS,
and the Company contained in Article III and in any agreement, instrument, or
document delivered pursuant hereto or in connection herewith on or prior to the
Effective Time, in each case that are qualified as to materiality or make
reference to Company Material Adverse Effect, shall be true and correct as of
date hereof and as of the Effective Time as if made on such date, and each of
the representations and warranties of Weatherford, WEUS, and the Company herein
and therein that is not so qualified as to materiality or as to Company Material
Adverse Effect shall be true and correct in all material respects on and as of
the date hereof and on and as of the Effective Time as if made on and as of such
date, except for representations and warranties that speak as of a specified
date, which need only be true and correct as set forth above as of the specified
date, and (ii) all covenants and agreements of the Company contained in this
Agreement to be performed on or before the Effective Time in accordance with
this Agreement shall have been duly performed in all material respects;
provided, however, that the conditions of this Section 8.2(a) shall be deemed to
have been satisfied as long as (x) the failure of any representation and
warranty to be true and correct (without giving effect for these purposes to any
Company Material Adverse Effect qualifiers) and (y) the failure to perform any
covenant or agreement as provided in (ii) would not, aggregating clauses (x) and
(y), result in, or reasonably be expected to result in, a Company Material
Adverse Effect; and Parent shall have received at the Effective Time a
certificate(s), dated the day of the Effective Time and validly executed by or
on behalf of Weatherford, WEUS, and the Company, to the effect that the
conditions set forth in clauses (i) and (ii) above have been so satisfied;
(b) Parent shall have received an opinion of King & Spalding in
form and substance reasonably satisfactory to Parent, on the basis of certain
facts, representations, and assumptions set forth in such opinion, dated the
Effective Time, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization qualifying under the provisions of Section
368(a) of the Code. In rendering such opinion, such counsel shall be entitled to
rely upon representations of the officers of the Parent, Merger Subsidiary, and
the Company substantially in the form of Exhibits D and E hereto;
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(c) the Limited Partnership (as defined in Section 12.17) shall
have been released from any indemnification obligations under the Formation
Agreement (as defined in Section 12.17) only in respect of any Excluded
Liability (as defined in Section 12.17), and WEUS shall have executed an
acknowledgment substantially in the form of Exhibit F hereto to that effect and
to the change of ownership of the Partnership effected by the Merger and
(d) WEUS shall have entered into the Voting Agreement.
Section 8.3 Conditions to the Obligations of Weatherford, WEUS, and the
Company. The obligations of Weatherford, WEUS, and the Company to consummate the
Merger are subject to the satisfaction of the following further conditions:
(a) (i) all representations and warranties of Parent and Merger
Subsidiary contained in Article IV, and in any agreement, instrument, or
document delivered pursuant hereto or in connection herewith on or prior to the
Effective Time, in each case that are qualified as to materiality or makes
reference to Parent Material Adverse Effect, shall be true and correct as of the
date hereof and as of the Effective Time as if made on such date, and each of
the representations and warranties of Parent and Merger Subsidiary herein and
therein that is not so qualified as to materiality or as to Parent Material
Adverse Effect shall be true and correct in all material respects on and as of
the date hereof and on and as of the Effective Time as if made on and as of such
date, except for representations and warranties that speak as of a specified
date, which need only be true and correct as of the specified date, and (ii) all
covenants and agreements of Parent and Merger Subsidiary contained in this
Agreement to be performed on or before the Effective Time in accordance with
this Agreement shall have been duly performed in all material respects;
provided, however, that the conditions of this Section 8.3(a) shall be deemed to
have been satisfied as long as (x) the failure of any representation and
warranty to be true and correct (without giving effect for these purposes to any
Parent Material Adverse Effect qualifiers) and (y) the failure to perform any
covenant or agreement as provided in (ii) would not, aggregating clauses (x) and
(y), result in, or reasonably be expected to result in, a Parent Material
Adverse Effect; and Parent shall have received at the Effective Time a
certificate(s), dated the day of the Effective Time and validly executed by or
on behalf of Parent and Merger Subsidiary, to the effect that the conditions set
forth in clauses (i) and (ii) above have been so satisfied; and
(b) the Company shall have received an opinion of Andrews & Kurth
L.L.P., in form and substance reasonably satisfactory to the Company, on the
basis of certain facts, representations, and assumptions set forth in such
opinion, dated the Effective Time, to the effect that the Merger will be treated
for federal income tax purposes as a reorganization qualifying under the
provisions of Section 368(a) of the Code. In rendering such opinion, such
counsel shall be entitled to rely upon representations of the officers of
Parent, Merger Subsidiary, and the Company substantially in the form of Exhibits
D and E hereto; and
(c) Parent shall have entered into the Registration Rights
Agreement.
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ARTICLE IX
Termination
Section 9.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the Board of Directors of the Company or
Parent or the stockholders of the Company or Parent):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if
(i) the Merger has not been consummated on or before
March 31, 2001; provided that the right to terminate this Agreement
pursuant to this Section 9.1(b)(i) shall not be available to any party
whose breach of any covenant, agreement, or other obligation contained
in this Agreement results in the failure of the Merger to be
consummated by such time;
(ii) there shall be any law or regulation that makes
consummation of the Merger illegal or otherwise prohibited or if any
judgment, injunction, order, or decree enjoining any party from
consummating the Merger is entered and such judgment, injunction,
order, or decree shall have become final and non-appealable;
(iii) the Parent Stockholders' Meeting has been duly
convened but the Parent Stockholders' Approval shall not have been
obtained at such Parent Stockholders' Meeting (or any adjournment
thereof); or
(iv) the other party breaches any representation, warranty,
covenant or other agreement contained in this Agreement that (A) would
give rise to the failure of such party to satisfy any condition set
forth in Section 8.2(a) or Section 8.3(a), as applicable, and (B)
cannot be or has not been cured within 45 days after the giving of
written notice to the breaching party of such breach (a "Material
Breach") (provided that the terminating party is not then in breach in
any material respect of any obligation, covenant or other agreement
contained in this Agreement or in Material Breach of any
representation or warranty contained in this Agreement);
(c) by Parent in accordance with Section 6.13(b), provided that
it has complied with all provisions thereof and that it complies with the
requirements, if then applicable, of Section 12.4;
(d) by the Company if (i) the Board of Directors of Parent or any
committee thereof shall have failed to recommend, withdrawn, or modified in a
manner adverse to the Company, its approval or recommendation of the issuance of
Parent Common Stock as contemplated hereby, or approved or recommended any
Superior Proposal, (ii) the Board of Directors of Parent or any committee
thereof shall have resolved to take any of the foregoing actions, or (iii) the
Board of Directors of Parent or any committee thereof shall have failed to
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affirm its recommendation of the issuance of Parent Common Stock as contemplated
hereby within six (6) Business Days of a request to do so by the Company;
(e) by the Company, if Parent shall have entered into, or
publicly announced its intention to enter into, an Acquisition Agreement with
respect to a Takeover Proposal or a Superior Proposal; or
(f) by Parent or the Company if the GC Agreement is terminated;
provided that the Company shall not be entitled to terminate this Agreement
pursuant to this Section 9.1(f) if the GC Agreement is terminated as a result of
the breach by the Company of any material covenant, agreement or other
obligation contained in the GC Agreement.
The party desiring to terminate this Agreement pursuant to this Section 9.1
(other than pursuant to Section 9.1(a)) shall give notice of such termination to
the other party.
Section 9.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall forthwith become void and of no
effect with no liability on the part of any party hereto, except that (i) the
agreements contained in Sections 7.7(b), 12.2, 12.4, 12.9 12.12, 12.13, and
12.15 shall survive the termination of this Agreement and (ii) such termination
shall not relieve any party hereto of any liability for any breach by that party
of its covenants, agreements, or other obligations under this Agreement
occurring prior to such termination.
ARTICLE X
Indemnification
Section 10.1 Indemnification.
(a) Weatherford and WEUS's Indemnity. From and after the
Effective Time, subject to the other terms and limitations in this Article X,
Weatherford and WEUS shall, jointly and severally indemnify, defend, reimburse,
and hold harmless the Parent Indemnitees (as defined in Section 12.17) from and
against any and all Losses (as defined in Section 12.17) actually incurred by
any of the Parent Indemnitees or asserted by a Third Party (as defined in
Section 12.17) against any of the Parent Indemnitees for or arising out of (i)
any breach of the representations or warranties of Weatherford, WEUS, or the
Company contained in Section 3.2 hereof, (ii) any breach of the covenants or
obligations of Weatherford, WEUS, or the Company under this Agreement (other
than a breach of any covenant or obligation in Article XI), (iii) the Retained
Liabilities (as defined in Section 12.17), or (iv) any Third Party Claim in
which it is ultimately determined by a final and non-appealable judgment (or
settled with Weatherford's consent, which consent will not be unreasonably
withheld) that the written information supplied to Parent or its representatives
by Weatherford, WEUS, or the Company, specifically for inclusion in the Proxy
Statement contained a material misstatement.
(b) Parent's Indemnity. From and after the Effective Time,
subject to the other terms and limitations in this Article X, Parent shall
indemnify, defend, reimburse, and hold harmless the Company Indemnitees (as
defined in Section 12.17) from and against any and all
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Losses actually incurred by any of the Company Indemnitees or asserted by a
Third Party against any of the Company Indemnitees for or arising out of (i) any
breach of the representations or warranties of Parent or Merger Subsidiary
contained in Section 4.2 hereof, (ii) any breach of the covenants or obligations
of Parent or Merger Subsidiary under this Agreement (other than a breach of any
covenant or obligation in Article XI), (iii) any agreement (other than the
Formation Agreement (except to the extent the Partnership shall have expressly
assumed liabilities and obligations under the Formation Agreement), the GC
Agreement and agreements entered into in violation of Article V of this
Agreement) to which any Weatherford Entity or their affiliates (other than the
Company and its subsidiaries) is a party (and to which the Company or any of its
subsidiaries may also be a party) and which relates to the Business (other than
the Retained Liabilities), (iv) any Third Party Claim alleging that the proxy
statement used in connection with the Parent Stockholders' Meeting contains a
material misstatement or omits to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading (other than information provided to Parent in writing by
Weatherford, WEUS, or the Company specifically for inclusion in such proxy
statement), or (v) the use of the name "WEUS" or "Weatherford" or the Marks
following the Effective Time. Parent acknowledges and agrees that the Losses
described in clause (iii) of the preceding sentence shall be retained by and
transfer with the Company and its subsidiaries and shall continue to be the
responsibility of the Surviving Corporation.
(c) Parent's Waiver. Notwithstanding anything to the contrary in
this Agreement, Parent shall not be liable to the Company's Indemnitees for any
exemplary, punitive, special, indirect, consequential, remote, or speculative
damages, except to the extent any such damages are included in any action by a
Third Party against a Company Indemnitee for which such Company Indemnitee is
entitled to indemnification under this Agreement.
(d) Weatherford and WEUS's Waiver. Notwithstanding anything to
the contrary in this Agreement, neither Weatherford nor WEUS shall be liable to
Parent Indemnitees for any exemplary, punitive, special, indirect,
consequential, remote, or speculative damages, except to the extent any such
damages are included in any action by a Third Party against a Parent Indemnitee
for which such Parent Indemnitee is entitled to indemnification under this
Agreement.
(e) Limitations on Indemnity.
(i) No Parent Indemnitees shall be entitled to assert any
right to indemnification under Section 10.1(a)(i) or Section 10.1(a)(iv)
until the aggregate amount of all Losses actually suffered by Parent
Indemnitees for matters covered thereby exceeds $2,500,000, and then only
to the extent such Losses exceed, in the aggregate, such amount; provided,
however, in no event shall Parent Indemnitees be entitled to recover in the
aggregate in excess of the market value as of the Effective Time of the
Merger Consideration for all Losses actually suffered by Parent Indemnitees
related to matters covered by Section 10.1(a)(i) and Section 10.1(a)(iv).
(ii) No Company Indemnitees shall be entitled to assert any
right to indemnification under Section 10.1(b)(i) or Section 10.1(b)(iv)
until the aggregate amount of all Losses actually suffered by Company
Indemnitees for matters covered
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thereby exceeds $2,500,000, and then only to the extent such Losses exceed,
in the aggregate, such amount; provided, however, in no event shall Company
Indemnitees be entitled to recover in the aggregate in excess of the market
value as of the Effective Time of the Merger Consideration for all Losses
actually suffered by Company Indemnitees related to matters covered by
Section 10.1(b)(i) and Section 10.1(b)(iv).
(f) Survival and Time Limitation. The representations and
warranties set forth in Sections 3.2 and 4.2 and all of the covenants,
obligations, and agreements of the parties set forth in this Agreement,
(including, but not limited to, those obligations set forth in Article VII, this
Article X and Article XI), shall survive the Effective Time. Notwithstanding the
foregoing sentence, except as provided in Section 11.13, after the Effective
Time, any assertion by a party or an Indemnitee that an Indemnifying Party is
liable to such party or Indemnitee for indemnification under the terms of
Section 10.1(a)(i), (ii) or (iv) or Section 10.1(b)(i), (ii) or (iv) of this
Agreement must be made in writing and must be given to the Indemnifying Party on
or prior to the date that is 12 months after the Effective Time (or not at all).
Nothing contained in this Section 10.1(f) or elsewhere in this Agreement shall
be construed to limit or restrict any rights to indemnity or other rights that
the Company, Weatherford, WEUS or the Partnership (or their successors) may have
under the Formation Agreement.
(g) COMPLIANCE WITH EXPRESS NEGLIGENCE RULE. ALL RELEASES,
DISCLAIMERS, LIMITATIONS ON LIABILITY, AND INDEMNITIES IN THIS AGREEMENT,
INCLUDING THOSE IN THIS SECTION 10.1, SHALL APPLY EVEN IN THE EVENT OF THE SOLE,
JOINT AND/OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF THE
PARTY WHOSE LIABILITY IS RELEASED, DISCLAIMED, LIMITED, OR INDEMNIFIED.
(h) Further Indemnity Limitations. The amount of any Loss shall
be reduced (i) to the extent any Person entitled to receive indemnification
under this Agreement receives any insurance proceeds with respect to a Loss and
(ii) to take into account any payment or payments actually received by a Person
entitled to receive indemnification under this Article X with respect to a Loss.
(i) Sole and Exclusive Remedy. From and after the Effective Time,
except as provided in Section 11.8 and Section 11.10, the indemnification
provisions of this Article X and the provisions of Section 12.4(c) shall be the
sole and exclusive remedies of each party (including the Company Indemnitees and
Parent Indemnitees) (i) for any breach of the other party's representations and
warranties contained in this Agreement and (ii) otherwise with respect to this
Agreement and the transactions contemplated hereby or thereby (including the
Company and its subsidiaries).
Section 10.2 Defense of Claims.
(a) Notice. If an Indemnitee (as defined in Section 12.17)
receives notice of the assertion of any claim or of the commencement of any
Third Party Claim (as defined in Section 12.17) with respect to which
indemnification is to be sought from the Indemnifying Party (as defined in
Section 12.17), the Indemnitee will give such Indemnifying Party reasonably
prompt notice thereof, but in any event not later than seven Business Days after
the Indemnitee's receipt of notice of such Third Party Claim, but the failure to
give timely notice will not affect
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the rights of the Indemnitee or the obligations of the Indemnifying Party except
and only to the extent that, as a result of such failure, the Indemnifying Party
was substantially disadvantaged. Such notice shall describe the nature of the
Third Party Claim in reasonable detail and will indicate the estimated amount,
if practicable, of the Loss that has been or may be sustained by the Indemnitee.
(b) Defense. The Indemnifying Party will have the right to
participate in or, by giving notice to the Indemnitee within seven Business Days
after receipt of notice of the Third Party Claim, jointly with any other
Indemnifying Party similarly notified, to elect to assume the defense of, any
Third Party Claim at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel (which counsel shall be reasonably acceptable
to Indemnitee), and assume the defense of the action and after notice from the
Indemnifying Party to the Indemnitee of its election to assume the defense, the
Indemnifying Party will not be liable to the Indemnitee for any legal or other
expenses except as provided below and except for the reasonable costs of
investigation subsequently incurred by the Indemnitee in connection with the
defense. The Indemnitee will have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel will be at
the expense of such Indemnitee unless (1) the employment of counsel by the
Indemnitee has been authorized in writing by the Indemnifying Party, (2) the
Indemnitee has reasonably concluded (based on advice of counsel) that there may
be legal defenses available to it or other Indemnitees that are different from
or in addition to those available to the Indemnifying Party, (3) a conflict or
potential conflict exists (based on advice of counsel to the Indemnitee) between
the Indemnitee and the Indemnifying Party (in which case the Indemnifying Party
will not have the right to direct the defense of such action on behalf of the
Indemnitee) or (4) the Indemnifying Party has not in fact employed counsel to
assume the defense of such action within a reasonable time after receiving
notice of the commencement of the action, in each of which cases the reasonable
fees, disbursements and other charges of counsel will be at the expense of the
Indemnifying Party or Parties. It is understood that the Indemnifying Party or
Parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm (in addition to local counsel)
admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the Indemnifying Party promptly as they are incurred. An
Indemnifying Party will not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be unreasonably
withheld). No Indemnifying Party shall, without the prior written consent of
each Indemnitee, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action or proceedings (whether or not any
Indemnified Party is a party thereto), unless such settlement, compromise or
consent includes an unconditional release of each Indemnitee from all liability
arising or that may arise out of such claim, action or proceeding.
(c) Direct Claim. Any Direct Claim (as defined in Section 12.17)
will be asserted by giving the Indemnifying Party reasonably prompt written
notice thereof, stating the nature of such claim in reasonable detail and
indicating the estimated amount, if practicable, but in any event not later than
20 calendar days after the Indemnitee becomes aware of such Direct Claim (but
the obligations of the Indemnifying Party and the rights of the Indemnitee shall
not be affected by the failure to give such notice, except and only to the
extent that, as a result of such failure, the Indemnifying Party is
substantially disadvantaged). The Indemnifying Party will
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have a period of 30 calendar days within which to respond to such Direct Claim.
If the Indemnifying Party does not respond within such 30-day period, the
Indemnifying Party will be deemed to have accepted such Direct Claim. If the
Indemnifying Party rejects such Direct Claim, the Indemnitee will be free to
seek enforcement of its rights to indemnification under this Agreement.
(d) Subrogation. If the amount of any Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is reduced
by recovery, settlement, or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement, or payment by or
against any other entity, the amount of such reduction, less any costs,
expenses, or premiums incurred in connection therewith, will promptly be repaid
by the Indemnitee to the Indemnifying Party. Upon making any indemnity payment,
the Indemnifying Party will, to the extent of such indemnity payment, be
subrogated to all rights of the Indemnitee against any Third Party in respect of
the Loss to which the indemnity payment relates; provided, however, that (i) the
Indemnifying Party is in compliance with its obligations under this Agreement in
respect of such Loss, (ii) until the Indemnitee recovers full payment of its
Loss, any and all claims of the Indemnifying Party against any such Third Party
on account of said indemnity payment are hereby made expressly subordinated and
subjected in right of payment to the Indemnitee's rights against such Third
Party and (iii) under no circumstance shall Parent or its affiliates (including
the Surviving Corporation and its subsidiaries) have any right to pursue
recovery under the Company Insurance Policies (as defined in Section 12.17).
Without limiting the generality or effect of any other provision hereof, each
such Indemnitee and Indemnifying Party will execute upon request all instruments
reasonably necessary to evidence and perfect the above-described subrogation and
subordination rights. Nothing in this Section 10.2(d) shall be construed to
require a party to obtain or maintain any insurance coverage.
ARTICLE XI
Tax Matters
Section 11.1 Tax Return Preparation. Each Pre-Closing Tax Return (as
defined in Section 12.17) shall be prepared by WEUS and delivered to and filed
by (or shall be the responsibility of) WEUS, with respect only to any US federal
income Tax Returns for all Pre-Closing Tax Periods, or by Parent, with respect
to all other Tax Returns. All such Pre-Closing Tax Returns shall be filed on a
basis consistent with prior Tax Returns (as defined in Section 12.17) filed with
respect to the Company and its subsidiaries. Parent shall cause the Company to
furnish Tax information to Weatherford for inclusion in the federal and state
consolidated or combined income or franchise Tax Returns in accordance with the
past custom and practice of the Company. All Post-Closing Tax Returns (as
defined in Section 12.17), which are required to be filed by or with respect to
the Company and its subsidiaries shall be prepared and filed by Parent.
Weatherford will include the income of the Company and its subsidiaries on the
Weatherford Group consolidated US federal income Tax Returns for all Pre-Closing
Tax Periods and shall pay and be responsible for, and be entitled to all Tax
benefits with respect to, all US federal income taxes of the Company and its
subsidiaries for only the Pre-Closing Tax Periods. Except as provided in the
immediately preceding sentence, Parent shall timely pay or cause to be paid all
Taxes shown on all Pre-Closing and Post-Closing Tax Returns.
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Section 11.2 Transfer Taxes. All sales, transfer, filing, recordation,
registration, and similar Taxes and fees arising from or associated with the
transactions contemplated hereunder, whether levied on Parent, WEUS, the
Company, any of its subsidiaries, or the Surviving Corporation, shall be borne
by Parent, and Parent shall file all necessary documentation with respect to,
and make all payments of, such Taxes and fees on a timely basis and, if required
by applicable law, WEUS shall and shall cause its affiliates to join the
execution of any such documentation.
Section 11.3 Use of Consistent Tax Practices. Any Tax Return which
includes or is based on the operations, ownership, assets or activities of the
Company and its subsidiaries for any Pre-Closing Tax Period (as defined in
Section 12.17), and any Tax Return which includes or is based on the operations,
ownership, assets, or activities of the Company or any of its subsidiaries for
any Post-Closing Tax Period (as defined in Section 12.17) to the extent the
items reported on such Tax Return might reasonably be expected to increase any
Tax liability of the Company, WEUS, or Weatherford for any Pre-Closing Tax
Period, shall be prepared in accordance with past Tax accounting practices used
by the Company, WEUS, or Weatherford with respect to the Tax Returns in question
(unless such past practices are no longer permissible under applicable Tax law),
and to the extent any items are not covered by past practices (or in the event
such past practices are no longer permissible under applicable Tax law), in
accordance with reasonable Tax accounting practices selected by the party
responsible for filing such Tax Return hereunder with the consent, not to be
unreasonably withheld or delayed, of the other party.
Section 11.4 Refunds or Credits. Except as otherwise set forth in this
Agreement, (i) to the extent any refunds or credits with respect to Taxes paid
by or on behalf of the Company and its subsidiaries are attributable to a
Pre-Closing Tax Period, such refunds or credits shall be for the account of
WEUS, and (ii) to the extent that any refunds or credits with respect to Taxes
paid by or on behalf of the Company and its subsidiaries are attributable to a
Post-Closing Tax Period, such refunds or credits shall be for the account of
Parent. Parent shall cause the Company to forward to WEUS or to reimburse WEUS
for any such refunds or credits for the account of WEUS within 10 business days
from receipt thereof by any of Parent, any of its affiliates or the Company.
WEUS shall forward to Parent or reimburse Parent for any refunds or credits for
the account of Parent within 10 business days from receipt thereof by WEUS. Any
refunds or reimbursements not made within the 10 business day period specified
above shall bear interest from the date received by the refunding or reimbursing
party at the prime interest rate published in the Wall Street Journal on the
tenth business day of the period specified above.
Section 11.5 Filing of Amended Returns. Any amended Tax Return or claim
for Tax refund for any Pre-Closing Tax Period shall be filed, or caused to be
filed, by WEUS or Weatherford, with respect only to any US federal income Tax
Returns for all Pre-Closing Tax Periods, or by Parent, with respect to all other
Tax Returns. Neither party shall, without the prior written consent of the other
party, make or cause to be made, any such filing, to the extent such filing, if
accepted, reasonably might be expected to increase by more than an immaterial
amount the Tax liability of the non-filing party for any Tax period. Any amended
Tax Return or claim for Tax refund for any Post-Closing Tax Period shall be
filed, or caused to be filed, only by Parent. Parent shall not, without the
prior written consent of WEUS, file, or cause to be filed, any amended Tax
Return or claim for Tax refund for any Post-Closing Tax Period to the extent
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that such filing, if accepted, reasonably might be expected to increase by more
than an immaterial amount the Tax liability of Weatherford, WEUS, or any
affiliate for any Pre-Closing Tax Period.
Section 11.6 Assistance and Cooperation. WEUS, Parent, their respective
affiliates, and the Company shall cooperate (and cause their affiliates to
cooperate) with each other and with each other's agents, including accounting
firms and legal counsel, in connection with Tax matters relating to the Company,
including (i) preparation and filing of Tax Returns, (ii) determining the
liability and amount of any Taxes due and the right to and amount of any refund
of Taxes, (iii) examinations of Tax Returns, and (iv) any administrative or
judicial proceeding in respect of Taxes assessed or proposed to be assessed.
Each party shall (i) retain all Tax Returns, schedules and work papers, and all
material records and other documents relating thereto, until the expiration of
the applicable statute of limitations (including, to the extent notified by any
party, any extensions thereof) of the Tax period to which such Tax Returns and
other documents and information relate or until the final determination of any
controversy with respect to such Tax period and until the final determination of
any payments that may be required with respect to such Tax period under this
Agreement, and (ii) give the other party reasonable written notice prior to
transferring, destroying or discarding any such Tax Returns, records, and
documents and, if the other party so requests, the Parent or WEUS, as the case
may be, shall allow the other party to take possession of such Tax Returns,
records and documents. Each of the parties shall also make available to the
other parties, as reasonably requested and available, personnel (including
officers, directors, employees, and agents) responsible for preparing,
maintaining, and interpreting information and providing information or documents
in connection with any administrative or judicial proceedings relating to Taxes.
Section 11.7 Closing Tax Certificate. At the Closing, WEUS shall
deliver to Parent a certificate signed under penalties of perjury (i) stating
that it is not a foreign corporation, foreign partnership, foreign trust or
foreign estate, (ii) providing its U.S. Employer Identification Number, and
(iii) providing its address, all pursuant to Section 1445 of the Code.
Section 11.8 Tax Allocation - WEUS's Obligations. WEUS shall be solely
liable for, shall pay, and shall indemnify the Parent Indemnitees against, (i)
all United States federal income Taxes of the Company and its subsidiaries and
all Losses arising therefrom (including any Losses arising from the failure to
pay such Taxes), relating to any Pre-Closing Tax Period and (ii) all United
States federal income Taxes of the Company and its subsidiaries or any Parent
Indemnitee and any Losses arising therefrom to the extent such Taxes or Losses
are attributable to income recognized by any foreign subsidiaries of the Company
that are described in Treasury Regulation ss.1.1502-76(b)(2)(vi)(C) and that are
included on a Tax Return of the Company, any of its subsidiaries or a Parent
Indemnitee for a taxable period that ends after the Effective Time but that are
properly allocable to the portion of such period ending on the day that includes
the Effective Time ("Deemed Income"); provided, however, any such Taxes or
Losses shall be reduced by any foreign Taxes paid by such foreign subsidiaries
of the Company prior to the Effective Time which are attributable to the Deemed
Income. Such United States federal income Taxes properly allocable to the
portion of such period ending on the day that includes the Effective Time shall
be computed on the basis of the taxable income or loss of any foreign subsidiary
of the Company for such partial period as determined from the books and records
of the foreign subsidiaries of the Company as if the taxable period of the
foreign subsidiaries had
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ended as of the Effective Time. WEUS shall not be responsible or liable for and
shall not indemnify the Parent Indemnitees against any state, local or foreign
Taxes of the Company and its subsidiaries, whether any of such Taxes relate to
or arise from Pre-Closing Tax Periods or Post-Closing Tax Periods. WEUS shall be
entitled to reduce its obligation to pay Taxes for which it is liable pursuant
to this Section 11.8 to the extent such Taxes are paid by or on behalf of the
Company or its subsidiaries on or before the Effective Time or are accrued as a
liability on the Partnership Unaudited Financial Statements.
Section 11.9 Taxes of Other Persons. WEUS agrees to indemnify the
Parent from and against the liability of the Company or its subsidiaries (i)
under Treasury Regulation Section 1.1502-6 by reason of the Company's having
been a member of any consolidated group at any time on or prior to the Effective
Time, or (ii) for United States federal income Taxes with respect to any
Pre-Closing Tax Period as a transferee or successor.
Section 11.10 Tax Allocation - Parent's Obligations. Parent shall be
solely liable for, shall pay, and shall indemnify the Company Indemnitees
against, (a) all federal income Taxes of the Company and its subsidiaries and
all Losses arising therefrom, relating to any Post-Closing Tax Period, (b) all
state, local and foreign Taxes of the Company and its subsidiaries and all
Losses arising therefrom, whether any of such Taxes relate to or arise from
Pre-Closing Tax Periods or Post-Closing Tax Periods, and (c) all Taxes and
Losses arising therefrom relating to the obligations of Parent and its
subsidiaries under Section 11.2.
Section 11.11 Tax Claim Notices. Each party shall promptly notify the
other party of (i) the commencement of any demand, claim, audit, examination,
action, or other proposed change or adjustment by any Taxing Authority (as
defined in Section 12.17) concerning any Tax and (ii) any other adjustment or
claim which could give rise to a liability for Taxes of the other party or other
payment pursuant to this Article XI, as the case may be (each a "Tax Claim").
Such notice shall contain factual information describing the asserted Tax Claim
in reasonable detail and shall include copies of any notice or other document
received from any Taxing Authority or other Person in respect of any such
asserted Tax Claim.
Section 11.12 Pre-Closing Tax Period Tax Claims. WEUS, or an affiliate
of WEUS, at its own expense, shall have the sole right to represent the
Company's interests in any Tax Claim relating to United States federal income
Taxes relating to any Pre-Closing Tax Period and to employ counsel of its
choice. Parent shall have the right to participate in such Tax Claim at its own
expense. None of WEUS or its affiliates shall consent to any settlement of
issues relating to the Company that reasonably would be expected to have an
adverse effect on the Taxes of the Company in any period after the Effective
Time without Parent's consent, which consent shall not be unreasonably withheld.
If WEUS elects to control the defense, compromise, or settlement of any Tax
Claim relating to United States federal income Taxes, WEUS shall keep Parent
informed of the progress and disposition of such Tax Claim. Parent shall handle
any Tax Claim relating to any Tax period of the Company included in a
Pre-Closing Tax Period which WEUS elects in writing not to control, and Parent
shall be entitled to defend, compromise or settle such Tax Claim in its sole
discretion.
Section 11.13 Survival and Time Limitation. All of the covenants,
obligations and agreements of the parties set forth in this Article XI shall
survive the Effective Time.
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Notwithstanding the foregoing sentence, after the Effective Time, any assertion
by Parent or any Parent Indemnitee that WEUS is liable to Parent or any Parent
Indemnitee, or any assertion by WEUS or any Company Indemnitee that Parent is
liable to WEUS or any Company Indemnitee, under this Article XI must be made in
writing and must be given to the indemnifying party on or prior to the date that
is 90 days after the date on which the applicable statute of limitations expires
with respect to such matters (or not at all).
Section 11.14 Sole and Exclusive Remedy. From and after the Effective
Time, the provisions of this Article XI shall be the exclusive agreement among
the parties (including the Company Indemnitees and the Parent Indemnitees) with
respect to Tax matters, including indemnification for Tax matters.
ARTICLE XII
Miscellaneous
Section 12.1 Representations, Warranties and Agreements. Except as set
forth in Section 10.1(f) hereof, all representations and warranties of the
parties, or any authorized representative thereof, contained in this Agreement,
or in any certificate, document or other instrument delivered in connection
herewith, shall terminate and cease to be of further force and effect as of the
Effective Time. Each of Parent and the Company covenant never to institute,
directly or indirectly, any action or proceeding of any kind against the other
based on or arising out of, or in any manner related to, the breach of such
representations or warranties contained in this Agreement (other than as set
forth in Section 10.1(f) hereof). The agreements contained herein and in any
certificate or other writing delivered pursuant hereto (other than the
Stockholders' Agreement, the Registration Rights Agreement, the Voting
Agreement, the Acknowledgement, the GC Purchase Agreement, and the Transitional
Services Agreement) shall not survive the Effective Time except for the
agreements set forth in Sections 6.5, 6.6, 6.9, 6.10, 6.11, 6.14, 7.3, 7.4, 7.6,
7.9, and Articles X, XI and XII.
Section 12.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware without reference
to the choice of law principles thereof.
Section 12.3 Entire Agreement. This Agreement, together with the
Schedules and Exhibits hereto, and any other agreements to be entered into as
contemplated herein, and the Confidentiality Agreement constitute the entire
agreement between the parties with respect to the subject matter hereof and
there are no agreements, understandings, representations or warranties between
the parties other than those set forth or referred to herein.
Section 12.4 Expenses and Fees. (a) Except as otherwise provided in
this Section 12.4, all costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense.
(b) With respect to litigation in connection with Section
7.2(c)(iii), all expenses incurred by Parent and WEUS in connection with such
litigation will be shared equally between Parent and WEUS.
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(c) Parent agrees that if this Agreement is terminated by (i)
either Parent or the Company pursuant to Section 9.1(b)(i) or Section
9.1(b)(iii) and prior to the termination hereof a bonafide Takeover Proposal has
been made by any Person or any Person publicly announces its intent to make a
Takeover Proposal, and in the case of a determination pursuant to Section
9.1(b)(i) such Takeover Proposal has not been withdrawn or such public
announcement of intent to make a Takeover Proposal has not been withdrawn or
revoked and in the case of a determination pursuant to Section 9.1(b)(iii) such
Takeover Proposal has not been withdrawn or such public announcement of intent
to make a Takeover Proposal has not been withdrawn or revoked at least 10
Business Days prior to the closing of the polls at the Parent Stockholders'
Meeting, unless, in the case of a termination by Parent, the failure to
consummate the Merger is the result of a material breach of any covenant or
agreement by WEUS or the Company under this Agreement, or, unless in the case of
a termination by the Company or Parent, the failure to consummate the Merger is
the result of the failure of the conditions in Section 8.1(b), (c), (e), (g),
(h), or (i) or Section 8.2(c) or (d), (ii) the Company pursuant to Sections
9.1(b)(iv), 9.1(d) or 9.1(e), or (iii) Parent pursuant to Section 9.1(c), then
Parent shall pay to WEUS $15,000,000. The Company and WEUS agree that if this
Agreement is terminated by Parent in accordance with the terms of Section
9.1(b)(iv), WEUS shall pay to Parent $15,000,000. The amounts payable as
provided in this Section 12.4(c) shall be paid as liquidated damages, and such
payment (x) shall constitute the exclusive monetary remedy available to the
payee at law or in equity in respect of any such termination or any breach of
this Agreement by the payor (other than for specific performance and for
indemnification after the Effective Time in accordance with the provisions of
this Agreement), (y) shall constitute payment for all claims, damages,
out-of-pocket expenses and fees arising out of or incurred by the payee in
connection with this transaction and (z) shall be payable by wire transfer of
same day funds not later than the day following the date of termination of this
Agreement.
(d) Parent and Weatherford agree that the Company and its
subsidiaries shall only be responsible for up to $500,000 for the costs and
expenses (including any transfer taxes) paid or incurred (including
reimbursement of Weatherford) in distributing the Excluded Assets pursuant to
Section 5.3, with any costs or expenses in excess of $500,000 to be borne by
Weatherford.
Section 12.5 Notices. All notices hereunder shall be sufficient upon
receipt for all purposes hereunder if in writing and delivered personally, sent
by documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax, or other electronic transmission service to the appropriate
address or number as set forth below.
If to Parent or Merger Subsidiary, to:
Parent
Universal Compression Holdings, Inc.
4440 Brittmoore Road
Houston, Texas 77041
Attention: Stephen A. Snider
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with a copy to:
King & Spalding
1100 Louisiana
Houston, Texas 77002-5219
Attention: Mark Zvonkovic and Chris LaFollette
if to any of the Weatherford Entities, to:
Weatherford International, Inc.
515 Post Oak Boulevard, Suite 600
Houston, Texas 77027
Attention: Curtis W. Huff
with a copy to:
Andrews & Kurth L.L.P.
4200 Chase Tower
600 Travis
Houston, Texas 77002-3090
Attention: Robert V. Jewell
Section 12.6 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that no party may assign, delegate,
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except (i) Parent or Merger
Subsidiary may transfer or assign, in whole or from time to time in part, to one
or more of their affiliates, the right to enter into the transactions
contemplated by this Agreement, but any such transfer or assignment will not
relieve Parent or Merger Subsidiary of its obligations hereunder and (ii) the
Company may assign to Weatherford or one of its subsidiaries the rights and
obligations of the Company under the GC Agreement, but any such assignment will
not relieve the Company of its obligations hereunder.
Section 12.7 Headings; Definitions. The Section and Article headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.
Section 12.8 Amendments and Waivers. This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Any
party hereto may, only by an instrument in writing, waive compliance by any
other party hereto with any term or provision of this Agreement on the part of
such other party hereto to be performed or complied with. The waiver by any
party hereto of a breach of any term or provision of this Agreement shall not be
construed as a waiver of any subsequent breach.
Section 12.9 Construction of Certain Provisions. It is understood and
agreed that the specification of any dollar amount in the representations and
warranties contained in this Agreement or the inclusion of any specific item in
the Schedules or Exhibits is not intended to
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imply that such amounts or higher or lower amounts, or the items so included or
other items, are or are not material, and no party shall use the fact of the
setting of such amounts or the fact of the inclusion of any such item in the
Schedules in any dispute or controversy between the parties as to whether any
obligation, item, or matter not described herein or included in a Schedule or
Exhibit is or is not material for purposes of this Agreement.
Section 12.10 Agreement for the Parties' Benefit. This Agreement is not
intended to confer upon any Person not a party hereto (other than the Merger
Subsidiary and WEUS) any rights or remedies hereunder, and no Person other than
the parties hereto or such Persons described above is entitled to rely on any
representation, warranty, or covenant contained herein.
Section 12.11 Severability. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal, or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated by this
Agreement are fulfilled to the extent possible.
Section 12.12 Jurisdiction. Any legal action, suit, or proceeding in
law or equity arising out of or relating to this Agreement and transactions
contemplated by this Agreement may be instituted in any state or federal court
in Harris County, Houston, Texas, and each party agrees not to assert, by way of
motion, as a defense, or otherwise, in any such action, suit, or proceeding, any
claim that it is not subject personally to the jurisdiction of such court, that
its property is exempt or immune from attachment or execution, that the action,
suit, or proceeding is brought in an inconvenient forum, that the venue of the
action, suit, or proceeding is improper or that this Agreement, or the subject
matter hereof or thereof may not be enforced in or by such court. Each party
further irrevocably submits to the jurisdiction of any such court in any such
action, suit, or proceeding. Any and all service of process and any other notice
in any such action, suit, or proceeding shall be effective against any party if
given by registered or certified mail, return receipt requested, or by any other
means of mail which requires a signed receipt, postage prepaid, mailed to such
party at the address listed in Section 10.5.
Section 12.13 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 12.14 Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement was not
performed in accordance with its terms or were otherwise breached, and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy to which they are entitled at law or in equity.
Section 12.15 Payments Constitute Liquidated Damages. The parties agree
that the dollar amounts provided in Section 12.4(c) payable upon the occurrence
of the events specified therein have been determined by negotiation and reflect
their best estimate and judgment of the monetary value of the losses and damages
to be incurred in connection with, and the time,
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efforts, expense and cost of opportunity associated with, the transactions
contemplated in this Agreement, and the parties agree to accept payment of such
amount as liquidated damages in full and complete satisfaction of all claims and
expenses arising from the occurrence of such events (including, but not limited
to, claims for specific performance).
Section 12.16 Counterparts; Effectiveness. This Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other party. In
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart.
Section 12.17 Definitions and Usage For the purposes of this Agreement:
"368 Reorganization" shall have the meaning specified in Section
3.18.
"1933 Act" shall have the meaning specified in Section 4.4.
"1934 Act" shall have the meaning specified in Section 4.4.
"Acquisition Agreement" shall have the meaning specified in
Section 6.13(b).
"Action" shall mean any action, suit, arbitration, inquiry,
proceeding, or investigation by or before any Governmental Authority.
"Adjustment Payment" shall mean a cash payment determined with
respect to a Transferred Employee subject to Section 7.11, determined by
multiplying the number of shares subject to options specified for such retained
Transferred Employee on Schedule 3.16 by the excess of the closing price of a
share of Weatherford Common Stock on the NYSE on the Business Day immediately
prior to the Effective Time over the exercise price or prices for the options
specified for such Transferred Employee on Schedule 7.11.
"affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"Agreement" shall have the meaning specified in the introductory
paragraph of this Agreement and Plan of Merger.
"Business" shall mean all compression services business conducted
by the Company and its subsidiaries, and all operations conducted by them and
related thereto, including, without limitation, (a) the sale and rental of
natural gas compressors, (b) the packaging, fabrication, and sales of natural
gas compressors, (c) the design of compression systems, (d) providing
compression related services, including full service turnkey compression
management, (e) maintenance, reconditioning, and repair services, and (f)
offshore platform installation and management of compression equipment and
excluding any business conducted by, and operations related to, the Excluded
Assets.
"Business Day" shall mean any day other than a Saturday, Sunday,
or legal holiday recognized by banking institutions in the State of Texas.
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"Canada" shall have the meaning specified in the recitals to this
Agreement.
"CERCLA" shall have the meaning specified in Section 3.14.
"Certificates" shall have the meaning specified in Section 1.4.
"Certificate of Merger" shall have the meaning specified in
Section 1.1(b).
"Code" shall have the meaning specified in the recitals of this
Agreement.
"Commitment" shall have the meaning specified in Section 3.2(a).
"Company" shall have the meaning specified in the introductory
paragraph of this Agreement.
"Company Benefit Plans" shall have the meaning specified in
Section 3.16(a).
"Company Common Stock" shall have the meaning specified in
Section 1.2(a).
"Company Disclosure Letter" shall mean the schedules referred
to in Article III delivered by the Company to Parent in connection with this
Agreement.
"Company Indemnitees" shall mean, collectively, Weatherford,
WEUS, and their affiliates (other than the Company and its subsidiaries) and its
and their officers, directors, employees, agents, and representatives.
"Company Insurance Policies" shall mean the insurance policies
maintained by WEUS or its affiliates (other than the Company or its
subsidiaries), including those relating to the Business.
"Company Material Adverse Effect" shall mean any fact,
circumstance, event, or condition which has or would reasonably be expected to
have a materially adverse effect on the business, condition (financial or
otherwise), assets, or liabilities of the Company and its subsidiaries, taken as
a whole (after taking into account insurance recoveries in respect thereof);
provided, however, that any actual or prospective change or changes relating to
or resulting from any change or changes in the prices of oil, gas, natural gas
liquids, or other hydrocarbon products, general economic conditions, local,
regional, national, or international industry conditions (including, without
limitation, changes in applicable laws or regulations, and changes in financial
or market conditions) or changes in the compressor manufacturing, sales, rental,
or services businesses of a general nature shall be deemed not to constitute a
"Company Material Adverse Effect."
"Company Material Contracts" shall have the meaning specified
in Section 3.13(a).
"Company Pension Plans" shall have the meaning specified in
Section 3.16(a).
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"Company Returns" shall mean all Tax Returns required to be
filed by the Company or any of its subsidiaries, and the term "Company Return"
means any one of the foregoing Company Returns.
"Company Shares" shall have the meaning specified in Section
3.2(a).
"Company Welfare Plan" shall have the meaning specified in
Section 3.16(a).
"Confidentiality Agreement" shall have the meaning specified
in Section 7.7(b).
"Deemed Income" shall have the meaning specified in Section
11.8.
"DGCL" shall have the meaning specified in Section 1.1(a).
"Direct Claim" shall mean any claim by an Indemnitee on
account of a Loss which does not result from a Third Party Claim.
"Effective Time" shall have the meaning specified in Section
1.1(b).
"Employee Options" shall have the meaning specified in Section
7.11.
"Employees" shall have the meaning specified in Section 7.11.
"Environmental Laws" shall have the meaning specified in
Section 3.14.
"ERISA" shall have the meaning specified in Section 3.16(a).
"Excluded Assets" shall have the meaning specified in Section
5.3.
"Excluded Liability" shall have the meaning given to the term
"Excluded Weatherford Liabilities" in the Formation Agreement.
"Formation Agreement" shall mean the Formation Agreement,
dated as of February 2, 1999, among Weatherford, the Limited Partnership, GC,
General Electric Capital Corporation, a New York corporation.
"FTC" shall have the meaning specified in Section 7.2(b).
"GAAP" shall have the meaning specified in Section 3.5.
"GC" shall have the meaning specified in the recitals to this
Agreement.
"GC Agreement" shall have the meaning specified in the
recitals to this Agreement.
"General Partner" shall mean Weatherford Global Compression
Holding, L.L.C., a Delaware limited liability company.
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"Global Compression Business Historical Financial Statements"
shall have the meaning specified in Section 3.5.
"Governmental Authority" shall mean (a) the United States of
America and any foreign nation, (b) any state, county, municipality, or other
governmental subdivision within or outside the United States of America, and (c)
any court or any governmental department, commission, board, bureau, agency, or
other instrumentality of the United States of America or any foreign nation or
of any state, county, municipality, water rights, taxing, or zoning authority,
or other governmental subdivision within or outside the United States of
America.
"GSI" shall have the meaning specified in Section 3.1(a).
"GSI Companies" shall have the meaning specified in Section
3.1(a).
"HSR Act" shall have the meaning specified in Section 3.4.
"Indemnifying Party" shall mean a party required to provide
indemnification under Section 10.1.
"Indemnitee" shall mean a Company Indemnitee or a Parent
Indemnitee.
"Investment" shall have the meaning specified in Section
5.3(b).
"Justice Department" shall have the meaning specified in
Section 7.2(b).
"Knowledge" when used in relation to any Person shall mean the
knowledge of such Person's officers, directors, and key employees.
"Licenses" shall have the meaning specified in Section 3.9.
"Liens" shall mean all liens, mortgages, security interests,
pledges, claims, options, and other encumbrances of any kind.
"Limited Partnership" shall mean Weatherford Enterra Compression
Company, L.P., a Delaware limited partnership and a subsidiary of the Company.
"Losses" shall mean, collectively, any and all claims,
liabilities, losses, causes of action, fines, penalties, litigation, lawsuits,
administrative proceedings, administrative investigations, damages, fines,
penalties, interest obligations, costs, and expenses, including amounts paid in
settlement, reasonable attorneys' fees and expenses, court costs, costs of
investigators, experts, accountants and financial advisors, and other costs of
suit.
"Marks" shall have the meaning specified in Section 6.6(b).
"Material Breach" shall have the meaning specified in Section
9.1(b).
"Merger" shall have the meaning specified in Section 1.1(a).
"Merger Consideration" shall have the meaning specified in
Section 1.2(a).
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"Merger Subsidiary" shall have the meaning specified in the
introductory paragraph of this Agreement.
"Merrill Lynch" shall have the meaning specified in Section
4.20.
"New Option" shall have the meaning specified in Section 7.11.
"NYSE" shall have the meaning specified in Section 7.11.
"officer" means in the case of Parent and the Company, any
executive officer of Parent, Merger Subsidiary, WEUS, or the Company, as
applicable, within the meaning of Rule 3b-7 of the 1934 Act.
"Parent" shall have the meaning specified in the introductory
paragraph of this Agreement.
"Parent 10-K" shall have the meaning specified in Section
4.5(a).
"Parent 10-Q" shall have the meaning specified in Section
4.5(a).
"Parent 401(k) Plan" shall have the meaning specified in
Section 6.5(c).
"Parent Average Price" shall mean the average closing price of
a share of Parent Common Stock on the NYSE for the twenty (20) consecutive
trading days ending on the Business Day prior to the Effective Time.
"Parent Common Stock" shall have the meaning specified in the
recitals to this Agreement.
"Parent Disclosure Letter" shall mean the schedules referred
to in Article IV delivered by Parent to the Company in connection with this
Agreement.
"Parent Employee Plan" shall have the meaning specified in
Section 4.16(a).
"Parent Indemnitees" shall mean, collectively, Parent and its
affiliates and its and their officers, directors, employees, agents, and
representatives.
"Parent Material Adverse Effect" shall mean any fact,
circumstance, event, or condition which has or would reasonably be expected to
have a materially adverse effect on the business, condition (financial or
otherwise), assets, or liabilities of Parent and its subsidiaries, taken as a
whole (after taking into account insurance recoveries in respect thereof);
provided, however, that any actual or prospective change or changes relating to
or resulting from any change or changes in the prices of oil, gas, natural gas
liquids, or other hydrocarbon products, general economic conditions, local,
regional, national, or international industry conditions (including, without
limitation, changes in applicable laws or regulations, and changes in financial
or market conditions), or changes in the compressor manufacturing, sales,
rental, or services businesses of a general nature shall be deemed not to
constitute a "Parent Material Adverse Effect."
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"Parent Material Contracts" shall have the meaning specified
in Section 4.13.
"Parent Organizational Documents" shall have the meaning
specified in Section 4.1.
"Parent Returns" shall mean all Tax Returns required to be
filed by Parent or any of its subsidiaries, and the term "Parent Return" means
any one of the foregoing Parent Returns.
"Parent SEC Filings" shall have the meaning specified in
Section 4.5(a).
"Parent Shares" shall have the meaning specified in Section
4.2(a).
"Parent Stockholders' Approval" shall have the meaning
specified in Section 6.3.
"Parent Stockholders' Meeting" shall have the meaning
specified in Section 6.3.
"Parent Unaudited Balance Sheet" shall have the meaning
specified in Section 4.6.
"Parent Unaudited Balance Sheet Date" shall have the meaning
specified in Section 4.6.
"Parent Unaudited Financial Statements" shall mean Parent's
unaudited financial statements included in its Quarterly Report on Form 10-Q for
the three months ended June 30, 2000, as filed with the SEC.
"Partnership" shall mean Weatherford Global Compression Services,
L.P., a Delaware limited partnership.
"Partnership Audited Financial Statements" shall have the
meaning specified in Section 3.5.
"Partnership Unaudited Balance Sheet Date" shall have the
meaning specified in Section 3.6.
"Partnership Unaudited Financial Statements" shall have the
meaning specified in Section 3.5.
"Permitted Encumbrances" shall mean:
(a) easements, rights-of-way, servitudes, permits, licenses,
surface leases, and other rights in respect of surface
operations, pipelines, grazing, logging, canals, ditches,
reservoirs or the like; conditions, covenants or other
restrictions; and easements for streets, alleys, highways,
pipelines, telephone lines, power lines, railways, and other
easements and rights-of-way on, over, or in respect of any
property which will not materially interfere with the
operation or use of any of the affected properties;
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(b) Liens for taxes or assessments, to the extent not yet
delinquent or, if delinquent, to the extent being contested
in good faith by appropriate proceedings;
(c) any materialman's, landlord's, carrier's, warehouseman's,
mechanics', repairman's, employees', contractors',
operators', or other similar liens, security interests, or
charges for liquidated amounts arising in the ordinary
course of business that are not delinquent or, if
delinquent, are being contested in good faith by appropriate
proceedings;
(d) rights of parties under contracts entered into in the
ordinary course of business, including, but not limited to,
leasehold and purchase rights;
(e) Liens on the assets of any entity or asset as a result of an
agreement relating to the acquisition of such entity or
asset;
(f) Liens incurred to secure the performance of tenders, bids,
leases, statutory obligations, surety and appeal bonds,
government contracts, performance and return-of-money bonds
and other obligations of a like nature incurred in the
ordinary course of business (exclusive of obligations for
the payment of borrowed money);
(g) Any interest or title of a lessor in property subject to any
Capitalized Lease Obligation (as defined in the Synthetic
Leases) or operating lease which Capital Lease Obligation or
operating lease is not prohibited under the Participation
Agreement;
(h) Liens arising under the Synthetic Leases; and
(i) all agreements, instruments, documents, Liens, and other
matters described or referred to in Schedule I hereto, or
which are waived by Parent.
Further, with respect to Parent, "Permitted Encumbrances" shall include Liens
arising under Parent's or its subsidiaries' revolving credit facility, operating
lease facility and such financial agreements referred to on Schedule 4.13 of the
Parent Disclosure Letter.
"Person" shall mean an individual, partnership, corporation,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, Governmental Authority or other legal entity
of any kind.
"Post-Closing Tax Period" shall mean any Tax period ending
after the Effective Time.
"Post-Closing Tax Return" shall mean any Company Return that
is required to be filed with respect to a Post-Closing Tax Period.
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"Pre-Closing Tax Period" shall mean any Tax periods ending on
or before the Effective Time.
"Pre-Closing Tax Return" shall mean any Company Return that is
required to be filed after the Effective Time with respect to a Pre-Closing Tax
Period.
"Proxy Statement" shall have the meaning specified in Section
3.19.
"Registration Rights Agreement" shall have the meaning
specified in Section 6.7.
"release" shall have the meaning specified in Section 3.14.
"Representatives" shall have the meaning specified in Section
6.13(a).
"Retained E-mail" shall mean all electronic mail and other
computer based communications stored on any electronic, digital, or other
storage or back up media and retained in the ordinary course of Weatherford,
WEUS's, the Company's, any of the Company's subsidiaries', or any of their
respective affiliates' business.
"Retained Liabilities" shall mean (a) the Excluded Liabilities
to the extent, and only to the extent, that Weatherford or WEUS has a continuing
obligation for such liabilities under the Formation Agreement and then only upon
the terms and conditions and for the amounts and time periods provided for in
the Formation Agreement, (b) the amounts payable by the Company or its
affiliates in connection with the termination of the Company's President, and
(c) any liabilities related to or arising out of the Excluded Assets.
"SEC" shall have the meaning specified in Section 3.13.
"Services Agreement" shall mean the Shared Services Agreement
between Weatherford and the Limited Partnership dated February 2, 1999.
"Stockholder Agreement" shall have the meaning specified in
the recitals of this Agreement.
"subsidiary" means, with respect to any Person, any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other Persons performing similar
functions are at any time directly or indirectly owned by such Person and shall
include, with respect to the Company, the Partnership and the Limited
Partnership.
"Superior Proposal" shall have the meaning specified in
Section 6.13(b).
"Surviving Corporation" shall have the meaning specified in
Section 1.1(a).
"Synthetic Leases" shall mean, collectively, (i) the
Participation Agreement, dated as of July 9, 1999, among the Partnership, as
lessee, ABN Amro Bank N.V., agent for the lessors, and the lessors listed on
Schedule I thereto, (ii) the First Amendment, dated as of February 2, 1999, to
the Participation Agreement, dated as of December 8, 1998, among the
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Partnership, ABN Amro Bank N.V., as agent for the lessors, and the lessors
listed on Schedule I thereto, (iii) the Participation Agreement, dated as of
December 8, 1998, among the Partnership, as lessee, and the lessors listed on
Scheduled I thereto, and (iv) all documents relating thereto, including any
guaranty in connection therewith.
"Takeover Proposal" shall have the meaning specified in
Section 6.13(a).
"Tax" or "Taxes" shall have the meaning specified in Section
3.15(a).
"Taxing Authority" shall mean any Governmental Authority
responsible for the imposition or collection of any Tax.
"Tax Benefit" shall mean any decreases in Tax actually
realized.
"Tax Claim" shall have the meaning specified in Section 11.11.
"Tax Return" shall mean any return or report, declaration,
report, claim for refund, information return, or statement relating to Taxes,
including any related schedules, attachments, or other supporting information,
with respect to Taxes, and including any amendment thereto.
"TBCA" shall have the meaning specified in Section 1.1.
"Third Party" shall mean any Person other than (i) WEUS or any
of its affiliates (including the Company and its subsidiaries) or (ii) Parent
and its affiliates.
"Third Party Claim" shall mean any claim or the commencement
of any claim, action or proceeding brought by a Third Party.
"Transferred Employee" shall have the meaning specified in
Section 6.5(a).
"Voting Agreement" shall have the meaning specified in Section
6.8.
"Weatherford" shall have the meaning specified in the
introductory paragraph of this Agreement.
"Weatherford 401(k) Plan" shall have the meaning specified in
Section 6.5(c).
"Weatherford Average Price" shall have the meaning specified
in Section 7.11.
"Weatherford Common Stock" shall have the meaning specified in
Section 7.11.
"Weatherford Compression Business Historical Financial
Statements" shall have the meaning specified in Section 3.5.
"Weatherford Entities" shall mean collectively Weatherford,
WEUS, the Company, and its subsidiaries, and any of such entities shall
individually be a "Weatherford Entity."
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"Weatherford Nominees" shall have the meaning specified in
Section 6.9.
"Weatherford Organizational Documents" shall have the meaning
specified in Section 3.1(c).
"WEUS" shall have the meaning specified in the introductory
paragraph of this Agreement.
A reference in this Agreement to any statute shall be to such
statute as amended from time to time, and the rules and regulations promulgated
thereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
Weatherford International, Inc.
By: /s/ CURTIS W. HUFF
----------------------------------
Name: Curtis W. Huff
--------------------------------
Title: Executive Vice President
-------------------------------
WEUS Holdings, Inc.
By: /s/ CURTIS W. HUFF
----------------------------------
Name: Curtis W. Huff
--------------------------------
Title: Executive Vice President
-------------------------------
Enterra Compression Company
By: /s/ CURTIS W. HUFF
----------------------------------
Name: Curtis W. Huff
--------------------------------
Title: Executive Vice President
-------------------------------
Universal Compression Holdings, Inc.
By: /s/ ERNIE L. DANNER
----------------------------------
Name: Ernie L. Danner
--------------------------------
Title: Executive Vice President
-------------------------------
Universal Compression, Inc.
By: /s/ ERNIE L. DANNER
----------------------------------
Name: Ernie L. Danner
--------------------------------
Title: Executive Vice President
-------------------------------
