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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): MARCH 17, 1997
ENERGY VENTURES, INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-7265 04-2515019
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
5 POST OAK PARK, SUITE 1760,
HOUSTON, TEXAS 77027-3415
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 297-8400
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Exhibit Index Appears on Page 4
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ITEM 5. OTHER EVENTS.
On February 21, 1997, Energy Ventures, Inc., a Delaware corporation
(the "Company"), entered into a Stock Purchase Agreement (the "Purchase
Agreement") with Seigo Arai and Kanematsu USA Inc., a New York corporation,
providing for the acquisition by the Company of TA Industries, Inc., a Delaware
corporation ("TA Industries"), in exchange for approximately $64 million cash
and assumed debt.
TA Industries designs, manufactures and markets worldwide a complete
line of tubular couplings and accessories under the brand names Texas Arai and
Tube-Alloy. The Company intends to integrate TA Industries with the Company's
drilling tools and premium tubulars division, thus creating an integrated
supplier of premium tubular products and services. The Company expects to
benefit from the TA Industries acquisition through manufacturing synergies,
cost savings and reduced current inventory levels at TA Industries.
The acquisition of TA Industries is subject to various conditions,
including the receipt of all required regulatory approvals and the expiration
of all waiting periods. Although there can be no assurance that the Purchase
Agreement will close, the Company currently anticipates that the acquisition
will be consummated shortly after the receipt of such regulatory approvals.
A copy of the press releases announcing the signing of the Purchase
Agreement is filed as Exhibit 99.1 and is hereby incorporated herein by
reference.
Statements made herein that are forward-looking in nature are intended
to be "forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934. Although the Company believes that the
expectations described herein are reasonable, the actual results could differ
materially from those currently anticipated. Factors that could cause results to
differ materially include, changes in industry conditions and demand for oil and
gas, changes in the market for premium tubular goods and couplings and delays in
the ability of the Company to fully integrate the operations of TA Industries
and achieve the strategic benefits described above.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
2.1 - Stock Purchase Agreement dated as of February 21, 1997,
among Seigo Arai, Kanematsu USA Inc. and Energy Ventures,
Inc.
99.1 - Press Release of the Company dated February 21, 1997,
announcing the signing of the Purchase Agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENERGY VENTURES, INC.
Dated: March 17, 1997 /s/ JAMES G. KILEY
---------------------------------
James G. Kiley
Vice President and
Chief Financial Officer
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INDEX TO EXHIBITS
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Number Exhibit
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2.1 Stock Purchase Agreement dated as of February 21, 1997, among Seigo Arai,
Kanematsu USA Inc. and Energy Ventures, Inc.
99.1 Press Release of the Company dated February 21, 1997, announcing the
signing of the Purchase Agreement.
</TABLE>
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
by and among
SEIGO ARAI,
KANEMATSU USA INC.
and
ENERGY VENTURES, INC.
Dated February 21, 1997
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
TERMS OF PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . 6
2.1 Sale of the Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Purchase Price and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Post-Closing Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Documents to Be Delivered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
ARAI REGARDING THE COMPANY . . . . . . . . . . . . . . . . . . . . . 8
3.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Authority and Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Affiliates and Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 No Violation; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.8 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.10 Title to and Condition of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.11 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.13 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.14 Absence of Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 4
INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF
THE STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1 Authority and Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Execution and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.3 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.4 No Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . 19
5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Due Authorization, Execution and Delivery; Effect of Agreement . . . . . . . . . . . . . . . . . . . 20
5.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.4 Purchaser for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
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ARTICLE 6
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.1 Conduct of the Business Pending the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2 Governmental Approvals; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.3 Litigation and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.4 Notice of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.5 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.6 Covenant Not to Compete With the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.7 Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.8 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 7
CONDITIONS TO PURCHASER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . 26
7.1 Representations True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.2 Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3 Stockholders' Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.5 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.6 No Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.7 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.8 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 8
CONDITIONS TO THE STOCKHOLDER'S OBLIGATIONS . . . . . . . . . . . . . . . . . 28
8.1 Representations True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2 Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.3 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.4 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.5 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.6 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 9
TERMINATION PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . 29
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.2 Effect on Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 10
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 29
10.1 Indemnification by the Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2 Indemnification by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.3 Notice and Opportunity to Defend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.4 Express Negligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 11
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS,WARRANTIES AND AGREEMENTS . . . . . . . . . . . . . . . . . 33
</TABLE>
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ARTICLE 12
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 33
12.1 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.3 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.5 Effect of Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.6 Taking of Necessary Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.7 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.8 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.11 Construction and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.12 Modification and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.13 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.14 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.15 Governing Law; Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
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STOCK PURCHASE AGREEMENT
Stock Purchase Agreement (this "Agreement") dated as of February 21,
1997, among Seigo Arai ("Arai"), Kanematsu USA Inc., a New York corporation
("Kanematsu" and together with Arai, the "Stockholders"), and Energy Ventures,
Inc., a Delaware corporation (the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Stockholders are the direct owners of all of the issued
outstanding shares of capital stock of TA Industries, Inc., a Delaware
corporation (the "Company"); and
WHEREAS, the Stockholders desire to sell to Purchaser, and Purchaser
desires to buy from the Stockholders, all of the outstanding shares of the
Company's common stock, $.01 par value (the "Company Stock");
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions hereinafter set forth, the parties do hereby agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings given
to them in this Article 1, unless defined elsewhere in this Agreement.
1.1 "Affiliate" shall mean with respect to a specified Person, a
Person that, directly or indirectly, controls, is controlled by or is under
common control with such specified Person.
1.2 "Agreement" shall have the meaning such term is given in the
introductory paragraph to this Agreement.
1.3 "Arai" shall have the meaning such term is given in the
introductory paragraph to this Agreement.
1.4 "AIW" shall have the meaning such term is given in Section 6.6
hereof.
1.5 "Assets" shall mean all of the assets and properties of the
Company and the Subsidiaries, tangible and intangible, real, personal and
mixed.
1.6 "Benefit Plan" means any collective bargaining agreement or
any bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical dependent care, cafeteria, employee assistance, scholarship program or
other plan, arrangement or understanding
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(whether or not legally binding) providing benefits to any current or former
employee or director of the Company or any of its Subsidiaries.
1.7 "Control" means the power, direct or indirect, to direct or
cause to direct the management and policies of such Person whether by contract
or otherwise and, in any event and without limitation, any Person owning 15% or
more of the voting securities of another Person shall be deemed to control that
Person.
1.8 "Business Day" shall mean any day other than Saturday, Sunday
or other day on which federally chartered commercial banks in Houston, Texas
are authorized by law to close.
1.9 "Closing" shall have the meaning such term is given in Section
2.2 hereof.
1.10 "Closing Date" shall have the meaning such term is given in
Section 2.2 hereof.
1.11 "Closing Date Balance Sheet" shall have the meaning such term
is given in Section 2.4 hereof.
1.12 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.13 "Company" shall have the meaning such term is given in the
recitals to this Agreement.
1.14 "Company Released Parties" shall have the meaning such term is
given in Section 10.5 hereof.
1.15 "Company Stock" shall have the meaning such term is given in
the recitals to this Agreement.
1.16 "Confidentiality Agreement" shall have the meaning such term
is given in Section 6.5 hereof.
1.17 "Damages" shall mean any and all liabilities, losses,
assessments, claims, costs and expenses (including interest, awards, judgments,
penalties, settlements, fines, actual costs of remediation, costs and expenses
incurred in connection with investigating and defending any claims or causes of
action (including, without limitation, attorneys' fees and expenses and all
fees and expenses of consultants and other professionals)); provided, however,
that Damages shall not include consequential, punitive or incidental losses
except to the extent such losses are paid or owed to a third party.
1.18 "Default" shall mean, as to any party to this Agreement, (i) a
default by such party in the performance of any of its material obligations
hereunder and the continuation of such default for a period of five business
days after written notice is delivered by Purchaser (in the case of a default
by a Stockholder) or by the Stockholders (in the case of a default by
Purchaser) to the defaulting party that a
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default has occurred or (ii) the willful breach of any representation, covenant
or warranty hereunder.
1.19 "Encumbrance" shall mean any security interest, mortgage,
pledge, claim, lien, charge, option, defect, encumbrance, or other right or
interest of any nature whatsoever.
1.20 "Environmental Laws" shall mean any and all laws, statutes,
ordinances, rules, regulations, orders, or determinations of any Governmental
Entity pertaining to health, safety or the environment in effect in any and all
jurisdictions in which the Company or the Subsidiaries are conducting or at any
time have conducted business, or where any of the Assets are located, or where
any hazardous substances generated by or disposed of by the Company or the
Subsidiaries are located, including, but not limited to, the Clean Air Act, as
amended, the Comprehensive Environmental, Response, Compensation, and Liability
Act of 1980 ("CERCLA"), as amended, the Federal Water Pollution Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, the
Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), the Safe
Drinking Water Act, as amended, the Toxic Substances Drinking Water Act, as
amended, the Superfund Amendments and Reauthorization Act of 1986, as amended,
and other environmental conservation or protection laws. The terms "hazardous
substance", "release" and no "threatened release" have the meanings specified
in CERCLA, and the terms "solid waste" and "disposal" (or "disposed") have the
meanings specified in RCRA; provided, however, in the event either CERCLA or
RCRA is amended so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply subsequent to the effective date of such amendment,
and provided further that, to the extent the laws of the state in which any
Assets are located establish a meaning for "hazardous substance", "release",
"solid waste" or "disposal" which is broader than that specified in either
CERCLA or RCRA, such broader meaning shall apply.
1.21 "Environmental Liabilities" shall mean any and all Damages
(including remediation, removal, response, abatement, clean-up, investigative
and/or monitoring costs and any other related costs and expenses) incurred or
imposed (a) pursuant to any agreement, order, notice, requirement,
responsibility or directive (including directives embodied in Environmental
Laws), injunction, judgment or similar documents (including settlements)
arising out of, in connection with or under Environmental Laws, or (b) pursuant
to any claim by a Governmental Entity or other third Person or entity for
personal injury, property damage, damage to natural resources, remediation or
similar costs or expenses incurred or asserted by such entity or person
pursuant to common law or statute and arising out of or in connection with a
release, as such term is defined in Section 101(22) of CERCLA, of Hazardous
Materials.
1.22 "Financial Statements" shall have the meaning such term is
given in Section 3.13 hereof.
1.23 "GAAP" shall mean United States generally accepted accounting
principles as applied by the Company and its Subsidiaries in a manner
consistent with that used for the preparation of the Financial Statements.
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1.24 "Governmental Entity" shall mean any court, administrative
agency or commission or other governmental or quasi-governmental authority or
instrumentality.
1.25 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
1.26 "Indemnifying Party" shall be as defined in Section 10.3
hereof.
1.27 "Indemnitee" shall be as defined in Section 10.3 hereof.
1.28 "Interim Financial Statements" shall have the meaning such
term is given in Section 3.13 hereof.
1.29 "IRS" shall mean the United States Internal Revenue Service.
1.30 "Kanematsu" shall have the meaning such term is given in the
introductory paragraph to this Agreement.
1.31 "Last Regulatory Approval" shall mean the final Requisite
Regulatory Approval required by applicable Federal laws of the United States
and laws of any state having jurisdiction over the transactions contemplated by
this Agreement for the transactions contemplated by this Agreement to be
consummated.
1.32 "Material Adverse Effect" shall mean a single event,
occurrence or fact that, together with all other events, occurrences and facts
that could reasonably be expected to result in a material loss to the Company
and its Subsidiaries, would have, or might reasonably be expected to have, a
material adverse effect on the Assets, business, operations or financial
condition of the Assets or the business of the Company and its Subsidiaries, or
that would constitute a criminal violation of law involving a felony.
1.33 "Net Equity" means, in accordance with GAAP and with reference
to the combined balance sheet of TxArai and Tube-Alloy on a consolidated basis,
(i) the difference between total assets and total liabilities (including
deferred income tax liabilities and capital lease obligations) less (ii) all
liabilities of the Company determined in accordance with GAAP to the extent
such liabilities are not otherwise included in the combined balance sheet of
TxArai and Tube-Alloy; provided, however, there shall be excluded from the
calculation of Net Equity any increases in the carrying value of any assets by
virtue of purchase price adjustments made after September 30, 1996, including
any purchase price adjustments relating to the Company's acquisition of
Tube-Alloy, or otherwise or increases due to the recognition of any non-cash
income after September 30, 1996, other than in connection with any sales of
products and services in the ordinary course of business.
1.34 "Objection Period" shall have the meaning such term is given
in Section 2.4 hereof.
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1.35 "Pension Plans" shall have the meaning such term is given in
Section 3.8 hereof.
1.36 "Person" shall mean any individual, corporation, limited
liability company, association, partnership, joint venture, trust or
unincorporated organization or government or any agent or political subdivision
thereof.
1.37 "Post-Closing Adjustment" shall have the meaning such term is
given in Section 2.4 hereof.
1.38 "Proposed Facility Disposition" shall have the meaning such
term is given in Section 6.7 hereof.
1.39 "Proprietary Rights" means all patents, inventions, shop
rights, know how, trade secrets, designs, plans, manuals, computer software,
specifications, confidentiality agreements, confidential information and other
proprietary technology and similar information; all registered and unregistered
trademarks, service marks, logos, trade and corporate names and all other
trademark rights; all registered and unregistered copyrights; and all
registrations for, and applications for registration of, any of the foregoing,
that are used in the conduct of the business of the Company and its
Subsidiaries.
1.40 "Purchase Price" shall have the meaning such term is given in
Section 2.3 hereof.
1.41 "Purchaser" shall have the meaning such term is given in the
introductory paragraph to this Agreement.
1.42 "Purchaser Losses" shall have the meaning such term is given
in Section 10.1 hereof.
1.43 "Requisite Regulatory Approvals" shall be as defined in
Section 5.3 hereof.
1.44 "Review Period" shall have the meaning such term is given in
Section 2.4 hereof.
1.45 "Sale Documentation" shall have the meaning such term is given
in Section 6.7 hereof.
1.46 "September 30 Combined Financials" shall have the meaning such
term is given in Section 3.13 hereof.
1.47 "Statement" shall have the meaning such term is given in
Section 2.4 hereof.
1.48 "Stockholders" shall have the meaning such term is given in
the introductory paragraph to this Agreement.
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1.49 "Subsidiaries" shall have the meaning such term is given in
Section 3.4 hereof.
1.50 "Survival Period" shall have the meaning such term is given in
Article 11 hereof.
1.51 "Taxes" means all federal, state, local, foreign and other
taxes or other assessments, including, without limitation, all net income,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, profit share, license, lease, service, service use, value added,
withholding, payroll, employment, excise, estimated severance, stamp,
occupation, premium, property, windfall profits, or other taxes of any kind
whatsoever, together with any interests, penalties, additions to tax, fines or
other additional amounts imposed thereon or related thereto, and the term "Tax"
means any one of the foregoing Taxes.
1.52 "Tax Returns" means all returns, declarations, reports,
statements and other documents of, relating to, or required to be filed in
respect of, any and all Taxes.
1.53 "TxArai" shall have the meaning such term is given in Section
3.13 hereof.
1.54 "Tube-Alloy" shall have the meaning such term is given in
Section 3.13 hereof.
1.55 "Waste Materials" means any toxic or hazardous materials or
substances, or solid wastes, including asbestos, buried contaminants,
chemicals, flammable or explosive materials, radioactive materials, petroleum
and petroleum products, and any other chemical, pollutant, contaminant,
substance or waste that is regulated by any Governmental Entity under any
Environmental Law. "Waste Materials" does not include useful products that are
stored or maintained in authorized containers.
ARTICLE 2
TERMS OF PURCHASE AND SALE
2.1 Sale of the Stock. On the Closing Date, upon the terms and
subject to the conditions contained herein, the Stockholders shall transfer,
sell, assign and convey, or cause there to be transferred, sold, assigned and
conveyed, to Purchaser, and Purchaser shall purchase from the Stockholders, the
Company Stock free and clear of all Encumbrances.
2.2 The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Fulbright &
Jaworski L.L.P., 1301 McKinney Street, Houston, Texas, at 9:00 a.m. (local
time) on the fifth business day following the date after the later to occur of
(a) the obtaining of the Last Regulatory Approval and (b) the receipt of all
other approvals, authorizations and consents set forth in Schedule 3.5 hereto,
or at such other time and place as Purchaser and the Stockholders may mutually
agree (the "Closing Date"). All matters at the Closing shall be considered to
take place simultaneously and no delivery of any
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document shall be deemed complete until all transactions and deliveries of
documents are completed. The Stockholders shall promptly advise Purchaser in
writing upon the occurrence of the events described in clauses (a) and (b)
above.
2.3 Purchase Price and Payment. Subject to the provisions of
Section 2.4 hereof, in consideration for the sale to Purchaser by the
Stockholders of the Stock, and upon the terms and subject to the conditions
contained herein, Purchaser shall pay to the Stockholders an aggregate purchase
price of $44,067,000 (the "Purchase Price"). The Purchase Price shall be paid
to each Stockholder as set forth on Schedule 2.3 hereto. Payment of the
Purchase Price shall be made by Purchaser to the Stockholders by wire transfer
of immediately available funds to a bank account designated in writing by the
Stockholders no later than two business days prior to the Closing.
2.4 Post-Closing Adjustment.
(a) Within 45 calendar days following the Closing,
Purchaser shall prepare and deliver to the Stockholders a consolidated
combined balance sheet (the "Closing Date Balance Sheet") of TxArai
and Tube-Alloy as of the Closing Date and a statement (the
"Statement") reflecting the calculation of the adjustment (the
"Post-Closing Adjustment") to the Purchase Price pursuant to this
Section 2.4. The Closing Date Balance Sheet shall be prepared in
accordance with GAAP. Purchaser shall provide the Stockholders with
access to copies of all work papers and other relevant documents to
permit the Stockholders to verify the accuracy of the entries
contained in the Closing Date Balance Sheet. The Stockholders shall
have a period of 30 calendar days after delivery of the Closing Date
Balance Sheet and the Statement (the "Review Period") to review it and
make any objections they may have in writing to Purchaser. If written
objections to the Closing Date Balance Sheet or the Statement are
delivered to Purchaser by the Stockholders within 10 days after the
Review Period (the "Objection Period"), then the Stockholders and
Purchaser shall attempt to resolve the matter or matters in dispute.
If no written objections are made by the Stockholders within the
Objection Period, then the Closing Date Balance Sheet and the
Statement shall be final and binding on the parties hereto. If
disputes with respect to the Closing Date Balance Sheet or the
Statement cannot be resolved by the Stockholders and Purchaser within
30 calendar days after the Objection Period, then, at the request of
Purchaser or the Stockholders, the specific matters in dispute shall
be submitted to Ernst & Young L.L.P. or such other independent
accounting firm as may be approved by the Stockholders and Purchaser,
which firm shall render its opinion as to such matters. Based on such
opinion, such independent accounting firm will then send to the
Stockholders and Purchaser its determination on the specified matters
in dispute, which determination shall be final and binding on the
parties hereto. The fees and expenses of such independent accounting
firm shall be borne one-half by the Stockholders and one-half by
Purchaser.
(b) Within two business days following the date upon
which the Closing Date Balance Sheet becomes final and binding upon
the parties pursuant to Section 2.4(a), (i) if the Net Equity shown on
the Closing Balance Sheet exceeds
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$15,834,839, Purchaser shall pay the Stockholders in immediately
available funds an amount equal to the difference and (ii) if the Net
Equity shown on the Closing Balance Sheet is less than $15,834,839,
the Stockholders shall pay to Purchaser in immediately available funds
an amount equal to the difference.
2.5 Documents to Be Delivered.
(a) At the Closing, the Stockholders shall deliver the
following documents to Purchaser:
(i) a certificate or certificates representing
the Company Stock duly endorsed in blank for transfer or
accompanied by duly executed powers assigning the Company
Stock in blank;
(ii) any resignations requested by Purchaser,
effective as of the Closing Date, of directors of the Company
and its Subsidiaries;
(iii) such minute books and stock transfer books of
the Company and the Subsidiaries (or other books of record
reflecting the ownership of the Subsidiaries) as are not then
in the possession of the Company or their respective
Subsidiaries;
(iv) the certificates required to be delivered by
Section 7.3 hereof; and
(v) a receipt for the Purchase Price.
(b) At the Closing, Purchaser shall deliver to the
Stockholders the following:
(i) $44,067,000 in immediately available funds;
and
(ii) the certificates required to be delivered
pursuant to Sections 8.3 and 8.4 hereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
ARAI REGARDING THE COMPANY
Arai hereby represents and warrants to Purchaser as follows:
3.1 Organization and Good Standing. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has full
corporate power and authority to own, operate and lease its assets in the
manner currently owned, operated and leased by it.
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3.2 Authority and Approval. The execution and delivery of this
Agreement by Arai, the performance by Arai of all the terms and conditions
hereof to be performed by Arai and the consummation of the transactions
contemplated hereby by him have been duly authorized and approved by any
requisite corporate action on the part of the Company. This Agreement
constitutes the legal, valid and binding obligation of Arai enforceable against
him in accordance with its terms, subject to applicable bankruptcy, insolvency
or other similar laws relating to or affecting the enforcement of creditors'
rights generally and to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
3.3 Capital Structure. The authorized capital stock of the
Company consists of 100,000 shares of the Company Stock, of which 900 shares
are issued and outstanding. There are no outstanding options, warrants,
convertible securities, calls, rights, commitments, preemptive rights,
agreements, arrangements or understandings of any character obligating the
Company (i) to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of the Company or any securities or
obligations convertible into or exchangeable for such shares or (ii) to grant,
extend or enter into any such option, warrant, convertible security, call,
right, commitment, preemptive right, agreement, arrangement or understanding
described in clause (i) above.
3.4 Affiliates and Subsidiaries.
(a) Set forth in Schedule 3.4 is the name and description
of each Person in which the Company owns any equity or other similar
ownership interests (each, a "Subsidiary", and collectively, the
"Subsidiaries") and a description, including amount and percentage, of
such interests. The interests set forth on Schedule 3.4 are owned by
the Company free and clear of all Encumbrances, including, voting
trusts or stockholders agreements.
(b) With respect to each Subsidiary set forth on Schedule
3.4 in which the Company owns, directly or indirectly, a majority of
the outstanding voting securities or any controlling equity interest:
(i) Each such Subsidiary that is a corporation is
a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation
and has the requisite corporate power and authority to carry
on its business as it is now being conducted, and to own,
operate and lease the Assets it now owns, operates or holds
under lease. Each such Subsidiary that is not a corporation
is duly organized under the laws of its jurisdiction of
organization and has all requisite power and authority to
carry on its business as it is now being conducted, and to
own, operate and lease the Assets that it now owns, operates
or holds under lease.
(ii) Such Subsidiary is duly qualified to do
business and is in good standing in each jurisdiction in which
the conduct of its business or the ownership or leasing of its
Assets requires it to be so qualified, except
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<PAGE> 14
where the failure to be so qualified or in good standing would
not have a Material Adverse Effect.
(iii) Arai has previously delivered to Purchaser
true and correct copies of the Articles or Certificate of
Incorporation and Bylaws, or other similar organizational or
constituent documents, of each such Subsidiary as in effect on
the date hereof. The minute books of such Subsidiary
previously made available to Purchaser are complete in all
material respects and reflect all material action taken prior
to the date hereof by their board of directors or other
governing bodies and stockholders or equity owners, in their
capacities as such.
(iv) All the outstanding shares of capital stock
of each such Subsidiary that is a corporation have been duly
authorized and validly issued and are fully paid and
non-assessable and were not issued in violation of any
preemptive rights or other preferential rights of subscription
or purchase of any person. All of the Company's direct or
indirect ownership interests in each such Subsidiary that is
not a corporation have been duly authorized and validly issued
or vested, were not issued in violation of any preemptive
rights or other preferential rights of subscription or
purchase of any Person, are fully paid and are non-assessable.
All such stock and ownership interests are owned of record and
beneficially by the Company, either directly or indirectly,
free and clear of all Encumbrances, including, voting trusts
or stockholder agreements.
(v) There are no outstanding options, warrants,
convertible securities, calls, rights, commitments, preemptive
rights, agreements, arrangements or understandings of any
character obligating such Subsidiary (i) to issue, deliver or
sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other equity interests of such
Subsidiary or any securities or obligations convertible into
or exchangeable for such shares or equity interests or (ii) to
grant, extend or enter into any such option, warrant,
convertible security, call, right, commitment, preemptive
right, agreement, arrangement or understanding described in
clause (i) of this Section 3.4.
3.5 No Violation; Consents. Except as set forth on Schedule 3.5,
this Agreement and the execution and delivery hereof by Arai do not, and the
fulfillment and compliance with the terms and conditions thereof and the
consummation of the transactions contemplated thereby will not, violate or
conflict with any provision of or constitute a default under (whether with
notice or the lapse of time or both), or require any filing, consent,
authorization or approval under, any constituent documents of the Company or
any Subsidiary or any judicial, administrative or arbitration order, award,
judgment, writ, injunction or decree applicable to or binding upon the Company
or any Subsidiary or any provision of any indenture, instrument creating any
Lien, lease, agreement, instrument, order, arbitration award, judgment or
decree to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is
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<PAGE> 15
bound or to which any of its Assets or properties is bound, including those
contracts listed on Schedule 3.7.
3.6 Litigation. Except as set forth in Schedule 3.6, there are no
actions, suits, claims or other legal, administrative, arbitration or other
proceedings, or known governmental investigations, examinations or inquiries
pending, or to the knowledge of Arai threatened, against the Company or any of
its Subsidiaries or any of their respective properties, assets, operations or
business or against the Company or any of its Subsidiaries that challenge the
consummation of the transactions contemplated hereby.
3.7 Contracts. Except as set forth in Schedule 3.7, neither
Company nor any of its Subsidiaries, nor any of their respective properties, is
a party to or bound by any agreement, contract or commitment (i) relating to
the borrowing of funds, (ii) requiring the expenditure of funds in excess of
$50,000 for any unscheduled agreements, contracts or commitments, (iii)
relating to any loan or advance to, or investment in, any person or any
agreement, contract, commitment or understanding relating to the making of any
such loan, advance or investment, (iv) relating to any guarantee or financial
assurance of any obligation or other contingent liability with respect to any
indebtedness or obligation of any Person, (v) relating to any management
service, employment, consulting or other similar type contract or agreement,
(vi) that would limit the freedom of the Company, any of its Subsidiaries or
Purchaser, or any Affiliate thereof, following the Closing, to engage in any
line of business, to own, operate, sell, transfer, pledge or otherwise dispose
of or encumber any of their respective assets or to compete with any person or
to engage in any business or activity in any geographic area, (vii) obligating
the Company or any of its Subsidiaries to provide indemnification or
contribution with respect to any matter outside the ordinary course of business
or (viii) that might reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries or, to the best knowledge of
Arai, the other contracting parties thereto have breached any provision of or
are in default (and no event or circumstance exists, to the best knowledge of
Arai with respect to other parties, that with notice, or the lapse of time or
both, would constitute a default) under the terms of any agreement listed in
Schedule 3.7 hereto, except, with respect to the Company and its Subsidiaries,
where such breach or default would not have a Material Adverse Effect. All
contracts, agreements, indentures, leases and other instruments listed in
Schedule 3.7 hereto are in full force and effect. There are no pending or, to
the best knowledge of Arai, threatened disputes with respect to the contracts,
agreements, indentures, leases or instruments described in Schedule 3.7.
Neither the Company nor any of its Subsidiaries is currently obligated to pay
any liquidated damages under any of the contracts, agreements, indentures,
leases or other instruments described in Schedule 3.7 hereto and Arai is not
aware of any facts or circumstance that could reasonably be expected to result
in an obligation of a Company or any of its Subsidiaries to pay any such
liquidated damages.
3.8 Employee Matters.
(a) Schedule 3.8 contains a list and brief description of
all "employee pension benefit plans" (as defined in Section 3(2) of
ERISA) (sometimes referred
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to herein as "Pension Plans"), "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA) and all other Benefit Plans
maintained, or contributed to, by the Company or its Subsidiaries for
the benefit of any present or former officers or employees of the
Company or any of its Subsidiaries. Arai has made available to
Purchaser true, complete and correct copies of (i) each Benefit Plan
(or, in the case of any unwritten Benefit Plans, descriptions
thereof), (ii) the most recent three annual reports on Form 5500 filed
with the IRS with respect to each Benefit Plan (if any such report was
required), (iii) the most recent IRS determination letter, if any, and
any rulings or determinations requested subsequent to the date of that
letter, (iv) the most recent actuarial report for each Benefit Plan
for which an actuarial report is required, (v) the most recent summary
plan description for each Benefit Plan for which such summary plan
description is required and each summary of material modifications
prepared after the last summary plan description, (vi) each trust
agreement and group annuity contract relating to any Benefit Plan and
(vii) all material correspondence for the last three years with the
IRS or Department of Labor relating to plan qualification, filing of
required forms, or pending, contemplated or announced plan audits. No
Pension Plan maintained or contributed to by the Company or its
Subsidiaries is, or has been during the last five years, subject to
Title IV of ERISA or Section 412 of the Code.
(b) Except as set forth in Schedule 3.8, all Pension
Plans have been the subject of determination letters from the IRS to
the effect that such Pension Plans are qualified and exempt from
Federal income taxes under Section 401(a) and 501(a), respectively, of
the Code and no such determination letter has been revoked nor, to the
best knowledge of Arai, has revocation been threatened, nor has any
such Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect that would
adversely affect its qualification or materially increase its costs.
(c) Except as set forth in Schedule 3.8, each Benefit
Plan that has been or is sponsored, participated in or contributed to
by the Company or any of its Subsidiaries: (A) is in compliance in
all material respects with all reporting and disclosure requirements
of ERISA, including, but not limited to, Part 1 of Subtitle B of Title
I of ERISA, (B) has had the appropriate Form 5500 filed timely for
each year of its existence, if required, (C) has at all times complied
with the bonding requirements of Section 412 of ERISA, if required,
and (D) to the knowledge of Arai, has no controversy pending with any
Governmental Entity (other than the payment of benefits in the normal
course and controversies disclosed on Schedule 3.8, nor any
controversy resolved adversely to the Company or any of its
Subsidiaries, which may subject the Company or any Subsidiary to the
payment of any penalty, interest, tax or other obligation.
(d) All voluntary employee benefit associations of the
Company or any of its Subsidiaries have been submitted to and approved
as exempt from Federal income tax under Section 501(c)(9) of the Code
by the IRS.
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(e) Except as set forth in Schedule 3.8, the execution of
this Agreement or the consummation of the transactions contemplated by
this Agreement will not give rise to any, or trigger any, change of
control, severance or other similar provision in any Benefit Plan.
(f) Except as set forth in Schedule 3.8, neither the
Company nor any of its Subsidiaries provides employee post-retirement
medical or health coverage or contributes to or maintains any employee
welfare benefit plan which provides for health benefit coverage
following termination of employment except as is required by Section
4980B(f) of the Code or other applicable statute, nor has it made any
representations, agreements, covenants or commitments to provide that
coverage.
(g) Except as set forth in Schedule 3.8, to the best
knowledge of Arai, none of the Company or any of its Subsidiaries, any
officer of the Company or any of its Subsidiaries or any of the
Benefit Plans which are subject to ERISA, including the Pension Plans,
or any trusts created thereunder, or any trustee or administrator
thereof, has engaged in a "prohibited transaction" (as such term is
defined in Section 406, 407 or 408 of ERISA or Section 4975 of the
Code) or any other breach of fiduciary responsibility that could
subject the Company or any of its Subsidiaries or any officer of the
Company or any of its Subsidiaries to any material tax or penalty on
prohibited transactions imposed by such Section 4975 or to any
material liability under Section 502(l)(1) of ERISA.
(h) With respect to any Benefit Plan that is an employee
welfare benefit plan, (A) no such Benefit Plan includes a welfare
benefits fund, as such term is defined in Section 419(e) of the Code,
(B) each such Benefit Plan that is a group health plan, as such term
is defined in Section 5000(b)(1) of the Code, complies in all material
respects with the applicable requirements of Section 4980B(f) of the
Code and (C) each such Benefit Plan (including any such Plan covering
retirees or other former employees) may be amended or terminated
without material liability to the Company or any of its Subsidiaries
on or at any time after the consummation of the Merger.
3.9 Taxes. Except as set forth in Schedule 3.9 hereto:
(a) All Tax Returns that are required to be filed (taking
into account all extensions) on or before the date of Closing for, by,
on behalf of or with respect to the Company or any of its
Subsidiaries, have been timely filed with the appropriate foreign,
federal, state and local authorities and all Taxes shown to be due and
payable on such Tax Returns or related to such Tax Returns have been
timely paid in full;
(b) All such Tax Returns and the information and data
contained therein have been, in all material respects, properly and
accurately compiled and completed, fairly presented in all material
respects the information purported to be shown therein, and reflect
all material liabilities for Taxes for the periods covered by such Tax
Returns;
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<PAGE> 18
(c) None of such Tax Returns are now under audit or
examination by any foreign, federal, state or local authority and
there are no agreements, waivers or other arrangements providing for
an extension of time with respect to the assessment or collection of
any Tax or deficiency of any nature against the Company or any of its
Subsidiaries or their respective properties, or with respect to any
such Tax Return, or any suits or other actions, proceedings,
investigations or claims now pending or threatened against the Company
or any of its Subsidiaries or their respective properties with respect
to any Tax, or any matters under discussion with a foreign, federal,
state or local authority relating to any Tax, or any claims for any
additional Tax asserted by any such authority;
(d) All Taxes due and required to be paid by the Company
or any of its Subsidiaries or assessed and due and required to be paid
by the Company or any of its Subsidiaries have been timely paid in
full;
(e) All withholding Tax and Tax deposit requirements
imposed on the Company or any of its Subsidiaries or any of their
respective properties for any and all periods prior to and including
the date hereof have, and to and including the Closing will have been
timely satisfied; and
(f) The Company and its Subsidiaries have each made
adequate provision for the payment in full of any and all unpaid Taxes
for any and all periods or portions thereof ending on or before the
date of the Closing.
3.10 Title to and Condition of Properties.
(a) There is set forth on Schedule 3.10 a list of each
item of tangible personal property owned by the Company or any
Subsidiary that has a net book value greater than $50,000. The
Company and its Subsidiaries have good and indefeasible title to all
of their respective personal property (including, without limitation,
those items of personal property set forth on Schedule 3.10), free and
clear of all Encumbrances, except for those Encumbrances set forth on
Schedule 3.10.
(b) There is set forth on Schedule 3.10 a list of each
item of tangible personal property leased by the Company or any of its
Subsidiaries that is material to the Company and its Subsidiaries
taken as a whole. The Company and its Subsidiaries have good title to
all the leasehold estates pursuant to which all of the personal
property leased by them is leased, free and clear of all Encumbrances,
except for those Encumbrances set forth on Schedule 3.10. Neither the
Company nor any of its Subsidiaries has breached any provision of or
is in default (and no event or circumstance exists that with notice,
or the lapse of time or both, would constitute a default by the
Company or any Subsidiary) under the terms of any lease or other
agreement pursuant to which the personal property set forth on
Schedule 3.10 is leased, except for a default or breach that would not
have a Material Adverse Effect. To the best knowledge of Arai, all of
such leases or other agreements are in full force and effect. There
are no pending or, to the best knowledge of Arai, threatened disputes
with
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<PAGE> 19
respect to any lease or other agreement pursuant to which the personal
property set forth on Schedule 3.10 is leased and, to the best
knowledge of Arai, the lessor thereunder has not breached any
provision of and is not in default (and no event or circumstance
exists that with notice, or the lapse or time or both, would
constitute a default by the lessor) under the terms of any such lease
or other agreement.
(c) There is set forth on Schedule 3.10 a description of
all real property owned by the Company or any of its Subsidiaries.
The Company and its Subsidiaries have good and indefeasible title to
all of the real property set forth on Schedule 3.10 hereto, in fee
simple absolute, free and clear of all Encumbrances, except for
Encumbrances set forth on Schedule 3.10. No parcel of the real
property set forth on Schedule 3.10 is being condemned, expropriated
or otherwise taken by any public authority, with or without payment of
compensation therefor, and, to the best knowledge of Arai, no such
condemnation, expropriation or taking has been proposed.
(d) There is set forth on Schedule 3.10 a description of
all real property leased by the Company and its Subsidiaries. The
Company and its Subsidiaries have good title to all the leasehold
estates pursuant to which the real property set forth on Schedule 3.10
is leased, free and clear of all Encumbrances set forth on such
schedule. Neither the Company nor any of its Subsidiaries has
breached any provision of or is in default (and no event or
circumstance exists that with notice, or the lapse of time or both,
would constitute a default by the Company or any Subsidiary) under the
terms of any lease or other agreement pursuant to which the real
property set forth on Schedule 3.10 is leased. To the best knowledge
of Arai, all of such leases or other agreements are in full force and
effect. There are no pending or, to the best knowledge of Arai,
threatened disputes with respect to any lease or other agreement
pursuant to which the real property set forth on Schedule 3.10 is
leased and, to the best knowledge of Arai, the lessor thereunder has
not breached any provision of and is not in default (and no event or
circumstance exists that with notice, or the lapse of time or both,
would constitute a default by the lessor) under the terms of any such
lease or other agreement.
(e) Each of the Company and its Subsidiaries owns or
possesses licenses or other rights to use all rights to all
Proprietary Rights necessary for the conduct of the business of the
Company and its Subsidiaries as currently conducted. Set forth in
Schedule 3.10 is a complete and accurate list of all patents,
trademarks and licenses that the Company and its Subsidiaries own or
possess or otherwise have rights to use and all patents, trademarks
and licenses that the Company and its Subsidiaries own or possess or
otherwise have rights to use. No licenses, sublicenses, covenants or
agreements have been granted or entered into by the Company or any
Subsidiary in respect of the items listed in Schedule 3.10 except as
noted thereon. None of the Company or any of its Subsidiaries has
received any notice of infringement, misappropriation or conflict from
any other Person with respect to such Proprietary Rights and the
conduct of the business of the Company and its Subsidiaries has not
infringed,
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misappropriated or otherwise conflicted with any Proprietary Rights of
any such Person. None of the Company or its Subsidiaries has given
indemnification for patent, trademark, service mark or copyright
infringements except to licensees or customers in the ordinary course
of business. All of the Proprietary Rights that are owned by the
Company or its Subsidiaries are owned free and clear of all
Encumbrances. All Proprietary Rights that are licensed by the Company
or any of its Subsidiaries from third parties are licensed pursuant to
valid and existing license agreements and such interests are not
subject to any Encumbrances other than those under the applicable
license agreements. The consummation of the transactions contemplated
by this Agreement will not result in the loss of any Proprietary
Rights and will not conflict with, constitute a breach, violation or
termination of, any agreement or understanding, whether written or
otherwise, relating to any Proprietary Rights necessary for the
conduct of the business by the Company or its Subsidiaries as
currently conducted.
3.11 No Brokers. None of Arai, the Company or any of its
Subsidiaries has employed or retained any investment banker, broker, agent,
finder or any other party, or incurred any obligation for broker's fees,
finder's fees or commissions, with respect to the sale of the Company Stock or
with respect to the transactions contemplated by this Agreement, or otherwise
dealt with anyone purporting to act in the capacity of a finder or broker with
respect thereto whereby the Company, any of its Subsidiaries or Purchaser may
be obligated to pay such a fee or commission. Arai agrees to indemnify and
hold Purchaser harmless from and against any and all claims, liabilities or
obligations with respect to any fees, commissions or expenses asserted by any
Person on the basis of any act, statement, agreement or commitment alleged to
have been made by any of the Company or its Subsidiaries or by Arai or any
Affiliate thereof with respect to any such fee, expense or commission.
3.12 Environmental Matters. Except as set forth in Schedule 3.12:
(a) Each of the Company and its Subsidiaries has, to the
best knowledge of Arai, at all times operated in compliance with all
applicable limitations, restrictions, conditions, standards,
prohibitions, requirements and obligations of Environmental Laws and
related orders of any court or other Governmental Entity, except where
the failure to so operate in compliance would not have a Material
Adverse Effect.
(b) Except as listed on Schedule 3.12, there are no
existing, pending or, to the best knowledge of Arai, threatened
actions, suits, claims, investigations, inquiries or proceedings by or
before any court or any other Governmental Entity directed against the
Company, any of its Subsidiaries or any of their respective assets
which pertain or relate to (i) any remedial obligations under any
applicable Environmental Law, (ii) violations of any Environmental
Law, (iii) personal injury or property damage claims relating to the
release of Waste Materials or (iv) response, removal or remedial costs
under CERCLA or any similar state law.
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(c) All notices, permits, licenses or similar
authorizations required to be obtained or filed by the Company or any
of its Subsidiaries under all applicable Environmental Laws in
connection with its current and, to the best knowledge of Arai,
previous operation or use of the assets, any other assets or
properties currently or, to the best knowledge of Arai, previously
leased or owned by the Company or any of its Subsidiaries or the
current and previous conduct of its business have been duly obtained
or filed and are in full force and effect, except where the failure to
do so would not have a Material Adverse Effect.
(d) Neither the Company nor any of its Subsidiaries has
received notice that any permit, license or similar authorization is
to be revoked or suspended by any Governmental Entity.
(e) Neither the Company nor any of its Subsidiaries owns
or operates any underground storage tanks.
(f) No portion of the assets or properties currently or,
to the best knowledge of Arai, previously leased or owned by the
Company or any of its Subsidiaries is part of a Superfund site under
CERCLA or any similar ranking or listing under any similar state law.
(g) To the best knowledge of Arai, all Waste Materials
generated by the Company or any of its Subsidiaries that are stored or
that require treatment or disposal have been transported, stored,
treated and disposed of by carriers, and by storage, treatment and
disposal facilities authorized and maintaining valid permits under all
applicable Environmental Laws, except for such matters that would not
have a Material Adverse Effect.
(h) To the best knowledge of Arai, no person has disposed
or released any Waste Materials on or under any asset or property
currently or, to the best knowledge of the Stockholders, previously
leased or owned by the Company or any of its Subsidiaries and neither
the Company nor any of its Subsidiaries has disposed or released Waste
Materials on or under the assets or properties currently or, to the
best knowledge of Arai, previously leased or owned by the Company or
any of its Subsidiaries, except in compliance with all applicable
Environmental Laws, except for such matters that would not have a
Material Adverse Effect.
(i) To the best knowledge of Arai, no facts or
circumstances exist that could reasonably be expected to result in any
liability to any person with respect to the current or past business
and operations of the Company, any of its Subsidiaries, the assets or
properties currently or previously leased or owned by the Company or
any of its Subsidiaries in connection with (i) any release,
transportation or disposal of any Waste Materials, hazardous substance
or solid waste or (ii) action taken or omitted that was not in full
compliance with or was in violation of any applicable Environmental
Law, except for such matters that would not have a Material Adverse
Effect.
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3.13 Financial Statements.
(a) True and correct copies of (i) the audited
consolidated balance sheet of Texas Arai, Inc., a Delaware corporation
and wholly owned Subsidiary ("TxArai"), as of September 30, 1996, and
(ii) the audited consolidated balance sheet of Tube-Alloy Capital
Corporation, a Texas corporation and wholly owned Subsidiary
("Tube-Alloy") at December 31, 1995 (collectively, the "Financial
Statements"), have been previously delivered to Purchaser. The
Financial Statements fairly present the financial position of TxArai
and Tube-Alloy as at the dates thereof and the cash flows and results
of operations for the periods covered thereby, and have been prepared
in accordance with GAAP.
(b) True and correct copies of the unaudited consolidated
balance sheet of Tube-Alloy as of September 30, 1996, and the
statement of income for the nine months ended September 30, 1996 have
been previously delivered to Purchaser (the "Interim Financial
Statements"). The Interim Financial Statements fairly present the
financial position of Tube-Alloy and its Subsidiaries at September 30,
1996 and results of operations for the nine months ended September 30,
1996, and are prepared in a manner consistent with the Financial
Statements and in accordance with GAAP.
(c) True and correct combined consolidated financial
statements for TxArai and Tube-Alloy as of September 30, 1996, and for
the nine months ended September 30, 1996, together with the combining
and consolidating statements relating thereto (the "September 30
Combined Financials") have previously been provided to Purchaser. The
September 30 Combined Financials fairly present the combined financial
position of TxArai and Tube-Alloy as of September 30, 1996, and the
results of operations for the nine months then ended in a manner
consistent with the Financial Statements and GAAP.
(d) Except as set forth or reserved for on the Interim
Financial Statements and the September 30 Combined Financials, or on
Schedule 3.13, neither the Company nor any of its Subsidiaries has any
liabilities of any nature, whether accrued, absolute, contingent,
unliquidated, civil, criminal or otherwise, and whether due or to
become due, other than those liabilities that (i) are fully reflected
or reserved against in the September 30 Combined Financials, (ii)
incurred in the ordinary course of business or (iii) are expressly
disclosed in any other Schedule hereto.
3.14 Absence of Certain Transactions. Except as set forth in
Schedule 3.14, since September 30, 1996, the Company has not engaged in any of
the transactions described in subsections (c), (d), (e), (g), (h), (m) and (n)
of Section 6.1. Since September 30, 1996, there has not occurred any event or
matter that would have a Material Adverse Effect.
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ARTICLE 4
INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF
THE STOCKHOLDERS
Each Stockholder, severally and not jointly, represents and warrants
to Purchaser as follows:
4.1 Authority and Capacity. Such Stockholder has the requisite
legal capacity and full power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby.
4.2 Execution and Delivery. Such Stockholder has duly executed
and delivered this Agreement. This Agreement constitutes a legal, valid and
binding obligation of such Stockholder, enforceable against such Stockholder in
accordance with its terms, except to the extent that such enforceability (i)
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally and (ii) is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.3 Compliance with Laws. The execution, delivery and performance
by such Stockholder of this Agreement, the consummation by such Stockholder of
the transactions contemplated hereby and the compliance by such Stockholder
with the provisions hereof will not conflict with, or result in any violation
of or default by such Stockholder (with or without notice or lapse of time, or
both) under, (i) any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which such Stockholder is a party or by which
such Stockholder may be bound or (ii) any statute or any judgment, decree,
order, rule or regulation of any Governmental Entity to which such Stockholder
is a party or by which such Stockholder may be bound.
4.4 No Consents. No consents, approvals or authorizations of any
Person (other than those which have been obtained) are required on the part of
such Stockholder in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
4.5 Stock. Each Stockholder owns the shares of the Company as set
forth in Schedule 4.5 free and clear of all Encumbrances and, upon Purchaser's
purchase of the shares of the Company Stock held by such Stockholder, Purchaser
shall acquire such shares of Company Stock free and clear of all encumbrances.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Stockholders as
follows:
5.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has all
requisite corporate power and authority to carry on its business as it is now
being conducted, and to execute,
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<PAGE> 24
deliver and perform this Agreement and to consummate the transactions
contemplated hereby.
5.2 Due Authorization, Execution and Delivery; Effect of
Agreement.
(a) The execution, delivery and performance by Purchaser
of this Agreement and the consummation by Purchaser of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Purchaser. This Agreement
has been duly and validly executed and delivered by Purchaser and
constitutes the legal, valid and binding obligation of Purchaser,
enforceable against it in accordance with its terms, except to the
extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to creditors' rights generally and (ii) is subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(b) The execution, delivery and performance by Purchaser
of this Agreement and the consummation by Purchaser of the
transactions contemplated hereby will not, with or without the giving
of notice or the lapse of time, or both, subject to obtaining any
required consents, approvals, authorizations or exemptions referred to
in Section 5.3 hereof, (i) violate any provision of any law, rule or
regulation to which Purchaser is subject; (ii) violate any order,
judgment or decree applicable to Purchaser; or (iii) conflict with, or
result in a breach or default under, the certificate of incorporation
or by-laws of Purchaser; except, in each case, for violations,
conflicts, breaches, defaults, terminations or modifications which in
the aggregate would not materially hinder or impair the consummation
of the transactions contemplated by this Agreement.
5.3 Consents. Except for the filing of a pre-merger notification
and report form under the HSR Act by Purchaser and the expiration of the
waiting period under the HSR Act and as set forth in Schedule 5.3, there is no
consent, approval or authorization of, or exemption by, or filing with, any
Governmental Authority or any Person in connection with the execution, delivery
or performance by Purchaser of this Agreement or the taking of any other action
contemplated hereby.
5.4 Purchaser for Investment. Purchaser is purchasing the Company
Stock for its own account, for investment purposes only and not with a view to
any public resale or other distribution thereof.
5.5 Brokerage. No banker, broker, finder or other Person is
entitled to any brokerage or finder's fee or other commission in respect of
this Agreement or the transactions contemplated hereby based in any way on
agreements, arrangements or understandings made by or on behalf of Purchaser or
any Affiliate of Purchaser. Purchaser agrees to indemnify and hold the
Stockholders harmless from and against any and all claims, liabilities or
obligations with respect to any fees, commissions or expenses asserted by any
Person on the basis of any act, statement, agreement or commitment alleged to
have been made by Purchaser or any Affiliate of Purchaser with respect to any
such fee, expense or commission.
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ARTICLE 6
COVENANTS
Except as expressly authorized by this Agreement or expressly
consented to in writing by Purchaser, Arai covenants and agrees with Purchaser
as follows:
6.1 Conduct of the Business Pending the Closing. Until the
Closing, Arai shall and shall cause the Company to comply with the provisions
set forth below (unless otherwise consented to in writing by Purchaser),
including filings under the HSR Act with the Federal Trade Commission and the
Antitrust Division of the Department of Justice, and shall furnish to the other
all such information in its possession as may be necessary for the completion
of the reports or notifications to be filed by the other:
(a) The Company and its Subsidiaries shall conduct its
business in the ordinary and usual course;
(b) Arai shall promptly notify Purchaser of, and furnish
to Purchaser any information that Purchaser may reasonably request
with respect to, the occurrence of any event or the existence of any
state of facts that may result in the representations and warranties
of Arai not being true if they were made at any time prior to or as of
the date of the Closing;
(c) Except as provided by the Benefit Plans or set forth
on Schedule 6.1, neither the Company nor any of its Subsidiaries shall
(i) grant or agree to grant any bonuses to any employee, (ii) grant
any general increase in the rates of salaries or compensation of its
or their employees or any specific increase to any employee, including
executive officers of the Company, (iii) provide for any new pension,
retirement or other employment benefits to any of its or their
employees or any increase in any existing benefits or (iv) terminate
or amend in any respect or provide for any material increase in
benefits under any Benefit Plan;
(d) Neither the Company nor any of its Subsidiaries shall
amend its charter or by-laws or enter into any merger or consolidation
agreement;
(e) Neither the Company nor any of its Subsidiaries shall
authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any capital stock of any class or any other securities or
equity equivalents or amend any of the terms of any such securities or
agreements;
(f) The Company shall use its best efforts to maintain
and preserve the business of the Company intact, to retain their
present employees so that they will be available to Purchaser after
the Closing and to maintain existing relationships with customers,
suppliers and others so that those relationships will be preserved
after the Closing;
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<PAGE> 26
(g) Neither the Company nor any of its Subsidiaries shall
sell, assign or dispose of any of its assets or properties, tangible
or intangible, or incur or assume any liabilities or enter into any
sale/leaseback or similar transaction, except for sales and
dispositions of inventory made, or liabilities incurred, in the
ordinary course of business consistent with past practices;
(h) Neither the Company nor any of its Subsidiaries shall
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of
any other Person or entity except in the ordinary and usual course of
business consistent with past practice and in amounts not material to
the Company and its Subsidiaries, taken as a whole, or make any loans,
advances or capital contributions to or investments in any other
Person or entity, other than in the ordinary course of business
consistent with past practices and in amounts not material to the
Company and its Subsidiaries, taken as a whole;
(i) The Company and its Subsidiaries shall use best
efforts to maintain in full force and effect all insurance currently
maintained;
(j) Neither the Company nor any of its Subsidiaries shall
take, or agree in writing or otherwise to take, any of the actions
described in this Section 6.1 or any action that would make any
representation or warranty inaccurate or untrue in any material
respect or that would result in any of the conditions set forth in
Article 7 hereof not being satisfied;
(k) Arai and the Company and its Subsidiaries shall use
its best efforts to comply with all applicable local, state and
federal laws, rules and regulations, judgments, decrees, orders,
governmental permits, certificates and licenses;
(l) The Company shall maintain the books of account and
records in the usual, regular and customary manner consistent with
practices employed prior to the date hereof;
(m) Neither the Company nor any of its Subsidiaries shall
implement or adopt (i) any change in its accounting methods or
principles or the application thereof (including depreciation lives)
or (ii) any material change in its tax methods or principles or the
application thereof (including depreciation lives); or
(n) Arai will not permit the Company or any Subsidiary,
without the prior written consent of Purchaser, to (i) declare or pay
any dividend on or make any other distribution in respect of any of
its capital stock or other ownership interests, (ii) split, combine or
reclassify any of its capital stock or other ownership interests or
issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of, its capital stock or
other ownership interests, (iii) purchase, redeem or otherwise acquire
any shares of its capital stock or other ownership interests, (iv)
advance or otherwise loan any funds to the Stockholders or any
Affiliate of the Company or the Stockholders
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<PAGE> 27
other than the Company or any Subsidiaries or (v) take any preliminary
action with respect to the foregoing.
6.2 Governmental Approvals; Consents.
(a) Until the Closing, Arai shall, and shall cause the
Company to, use its reasonable best efforts, and shall cooperate with
Purchaser, to obtain all permits, approvals, filings and consents
necessary or required to be obtained or made, and all waiting periods
required to expire, for the consummation of the transactions
contemplated by this Agreement under any applicable federal law or any
state having jurisdiction over the transactions contemplated hereby
(all such permits, approvals, filings and consents and the lapse of
all such waiting periods being referred to as the "Requisite
Regulatory Approvals"); and
(b) Until the Closing, Arai shall, and shall cause the
Company to, use its reasonable best efforts to obtain all consents,
approvals, clearances, waivers, orders or authorizations of any Person
necessary to be obtained by the Company and its Subsidiaries or the
Stockholders for the consummation of the transactions contemplated by
this Agreement.
6.3 Litigation and Claims. Until the Closing, Arai shall promptly
inform Purchaser in writing of any litigation, or of any claim or controversy
or contingent liability that might reasonably be expected to become the subject
of litigation, against the Company or any of its Subsidiaries or affecting any
of their respective Assets.
6.4 Notice of Changes. Until the Closing, Arai shall promptly
inform Purchaser in writing if any change shall have occurred or shall have
been threatened (or any development shall have occurred or shall have been
threatened involving a prospective change) in the financial condition, results
of operations, business or Assets of the Company or any of its Subsidiaries
that is or may reasonably be expected to have a Material Adverse Effect. Until
the Closing, Arai shall promptly inform Purchaser in writing if any
representation or warranty made by Arai in this Agreement shall cease to be
accurate or any breach of any covenant or other agreement required by this
Agreement to be performed or complied with by Arai.
6.5 Access to Information. Prior to the Closing, Arai shall cause
the Company to allow Purchaser to make such investigation of the business and
properties of the Company and its Subsidiaries as Purchaser may desire and,
upon reasonable notice, cause the Company to give to Purchaser and its counsel,
accountants and other representatives reasonable access, during normal business
hours throughout the period prior to the Closing, to the property, books,
commitments, agreements, records, files and personnel of the Company and its
Subsidiaries, and shall cause the Company to furnish to Purchaser during that
period all copies of documents and information concerning the Company as
Purchaser may reasonably request, subject to applicable law. All information
furnished to Purchaser and its representatives under this Section 6.5 shall be
kept confidential by such persons in accordance with the Confidentiality
Agreement dated December 9, 1996, between the Purchaser and Arai, as amended
from time to time (the "Confidentiality Agreement").
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<PAGE> 28
6.6 Covenant Not to Compete With the Business. As an inducement
to the Purchaser to acquire the Stock, Arai agrees that, except as otherwise
permitted herein, effective as of the Closing Date and for a period of three
years thereafter, he and his Affiliates shall not, without the consent of
Purchaser, directly engage in the manufacture of (i) couplings and accessories
used for oilfield tubular goods or (ii) products of a type currently
manufactured by the Company or any of its Subsidiaries. Aria acknowledges that
a remedy at law for any breach or attempted breach of this Section 6.6 will be
inadequate and further agrees that any breach of this Section 6.6 will result
in irreparable harm to Purchaser and Purchaser shall, in addition to any other
remedy that may be available to it, be entitled to specific performance and
injunctive and other equitable relief in case of any such breach or attempted
breach. Arai acknowledges that this covenant not to compete is being provided
as an inducement to the Purchaser to acquire the Company Stock and that this
Section 6.6 contains reasonable limitations as to time, geographical area and
scope of activity to be restrained that do not impose a greater restraint than
is necessary to protect the goodwill or other business interest of Purchaser.
Whenever possible, each provision of this Section 6.6 shall be interpreted in
such a manner as to be effective and valid under applicable law, but if any
provision of this Section 6.6 shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remaining provisions of
this Section 6.6. If any provision of this Section 6.6 shall, for any reason,
be judged by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this Section 6.6 but shall be confined in its operation to the
provision of this Section 6.6 directly involved in the controversy in which
such judgment shall have been rendered. In the event that the provisions of
this Section 6.6 should ever be deemed to exceed the time or geographic
limitations permitted by applicable laws, then such provision shall be reformed
to the maximum time or geographic limitations permitted by applicable law.
Notwithstanding anything to the contrary contained in this Section 6.6,
Purchaser acknowledges that Arai owns a minority interest in Arai Iron Works
Co. Ltd. ("AIW") which may compete with Company and its Subsidiaries and that
Arai shall be able to consult with and provide guidance to the management of
AIW but shall not serve as an employee, officer or director of AIW.
6.7 Right of First Refusal.
(a) Purchaser agrees that if, at any time during a period
of two years following the Closing Date, it shall elect to sell
(whether by sale of assets or stock) the United States business that
was conducted by the Company and its Subsidiaries as of the Closing
Date (the "Company Business") to any Person that is not an Affiliate
of the Purchaser (a "Proposed Disposition"), Purchaser shall (or shall
cause any Affiliate of Purchaser to which the Company Business may
have subsequently been transferred or conveyed, whether by asset
transfer, stock transfer, merger or otherwise, to) offer to Arai the
right to acquire the Facility that is proposed to be sold on the same
terms and conditions under which Purchaser or its Affiliate proposes
to dispose of the Company Business.
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(b) In the event of any Proposed Disposition, Purchaser
shall provide to Arai, at least 45 days prior to the Proposed
Disposition, (i) the general terms and conditions of the Proposed
Disposition (provided, however, Purchaser need not provide to Arai the
name of the proposed purchaser) and (ii) the documentation required to
be executed by Arai to purchase the Company Business that is subject
to the Proposed Disposition, which documentation shall be the same as
the documentation for the Proposed Disposition other than information
relating to the parties and conditions relating to Arai's rights under
this Agreement (the "Sale Documentation").
(c) If Arai elects to acquire the Company Business that
is subject to the Proposed Disposition, Arai shall (i) notify the
Purchaser in writing of such election by executing and delivering to
Purchaser the Sale Documentation (together with any funds to be
provided therewith) no later than 15 days after receipt of such notice
and (ii) subject to receipt of any necessary regulatory approvals on
the part of the Purchaser or any of its Affiliates, close the
transaction within five days thereafter or on the date that such
approval shall have been obtained.
(d) The foregoing right of first refusal granted to Arai
shall not apply (i) to any merger, consolidation, share exchange,
combination, sale of stock or change in control of Energy Ventures,
Inc., or any successor thereto, (ii) any transfer, sale, conveyance,
merger, consolidation, share exchange or other business combination
involving all or substantially all of Purchaser's and its
Subsidiaries' United States tubular manufacturing operations, (iii)
any transfer, sale, merger or conveyance of the stock of Grant
Prideco, Inc. (or any successor thereto), (iv) any merger,
consolidation or transfer of stock or assets to any Affiliate of the
Purchaser or any of the Purchaser's or its Affiliates' current or
future Subsidiaries or (v) any manufacturing or operating changes
effected by Purchaser or its Affiliates after the Closing with respect
to the Company or any of its Subsidiaries or the Company Business as
long as the Company or the Company Business continues to be owned or
operated by the Company or any of its Affiliates.
(e) The provisions of this Section 6.7 shall be null,
void and of no further force and effect in the event that Arai
voluntarily elects to terminate his employment with Purchaser or any
of its Affiliates prior to the expiration of the term ending two years
following the Closing Date.
(f) The rights provided under this Section 6.7 shall be
considered personal rights of Arai and may not, directly or
indirectly, be transferred, assigned or otherwise conveyed by Arai by
contract, operation of law or otherwise to any third party and any
breach or attempted breach by Arai shall terminate any further
obligations of Purchaser and its Affiliates under this Section 6.7.
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6.8 Employee Matters.
(a) In determining eligibility for and entitlement to
vacation and other normal benefits (excluding stock-based plans and
incentive programs) based on length of service by employees of the
Company and its Subsidiaries under the Purchaser's normal policies,
Purchaser agrees that service with the Company and its Subsidiaries
shall be considered by the Purchaser and its Affiliates as service
with the Purchaser and its Affiliates.
(b) Purchaser shall make available to the employees of
the Company and its Subsidiaries benefit programs substantially the
same as available to the employees of Purchaser.
(c) Purchaser agrees to cause Tube-Alloy to promptly pay
following the Closing the transaction bonuses to the employees of
Tube-Alloy as described on Schedule 6.8(b).
(d) Purchaser agrees to cause TxArai and Tube-Alloy to
maintain the two-year stay bonus program for the key employees of
TxArai and Tube-Alloy as more fully described on Schedule 6.8(c),
subject to a maximum payment under that plan of $2,600,000.
ARTICLE 7
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver
by Purchaser) on or prior to the Closing Date of all of the following
conditions:
7.1 Representations True and Correct. The representations of the
Stockholders set forth in this Agreement shall be true and correct at and as of
the Closing Date.
7.2 Performance of Covenants. The Stockholders shall have
performed and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed by or complied with
by them prior to or at the Closing. None of the events or conditions entitling
Purchaser to terminate this Agreement under Section 9.1 hereof shall have
occurred and be continuing.
7.3 Stockholders' Certificates. Arai shall have delivered to
Purchaser a certificate, dated the Closing Date, signed by Arai, stating that
(i) the representations and warranties of Arai set forth in this Agreement are
true and correct at and as of the Closing Date, (ii) Arai has performed and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed by or complied with by Arai prior to
or at the Closing, (iii) none of the events or conditions entitling Purchaser
to terminate this Agreement under Section 9.1 shall have occurred
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and be continuing and (iv) Arai, the Company and its Subsidiaries shall have
obtained all the consents, approvals or authorizations set forth in Schedule
3.5 hereto.
7.4 Governmental Approvals. The waiting period (and any extension
thereof) under the HSR Act shall have expired or been terminated. No statute,
rule or regulation or order of any court or administrative agency shall be in
effect which prohibits Purchaser from consummating the transactions
contemplated hereby and no suit, action, investigation or other proceeding
shall have been instituted or threatened (other than by the Purchaser or any
Affiliate thereof) seeking to restrain or prohibit Purchaser or the
Stockholders from consummating the transactions contemplated hereby.
7.5 Further Action. All consents, approvals, authorizations,
exemptions and waivers set forth in Schedule 3.5 hereto shall been obtained and
be effective and all other consents, approvals, authorizations, exceptions and
waivers from third Persons that shall be required in order to enable the
Stockholders to consummate the transactions contemplated hereby shall have been
obtained except where the failure to obtain any such consents, approvals,
authorizations, exemptions and waivers would not have a material adverse effect
on the Company Condition or materially hinder or impair the consummation of the
transactions contemplated by this Agreement.
7.6 No Bankruptcy. None of the Stockholders, the Company or any
Affiliate thereof shall have: (i) filed for voluntary bankruptcy (or shall have
commenced against it an involuntary bankruptcy) under any chapter or section of
the United States Bankruptcy Code; (ii) been adjudged bankrupt or insolvent in
proceedings filed under any section or chapter of the United States Bankruptcy
Code; (iii) made any general assignment for the benefit of creditors; (iv) been
unable, or stated that it is unable, to pay its debts as they become due; or
(v) taken any preliminary action with respect to the matters described in
clauses (i) or (iii).
7.7 No Material Adverse Change. Except for any matter disclosed
in this Agreement (including the Schedules hereto) there shall not have
occurred any event or matter having a Material Adverse Effect since September
30, 1996.
7.8 Legal Opinion. Purchaser shall have been furnished an opinion
of Hoffman Sutterfield & Ensenat, counsel to the Company, that (i) this
Agreement and the transactions contemplated hereby have been authorized by all
necessary action on the part of the Stockholders and the Company and (ii) all
of the outstanding shares of Company Stock have been duly authorized and
validly issued and are fully paid and nonassessable and free and clear of any
adverse claims.
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ARTICLE 8
CONDITIONS TO THE STOCKHOLDER'S OBLIGATIONS
The obligations of the Stockholders to sell the Company Stock shall be
subject to the satisfaction (or waiver by the Stockholders) on or prior to the
Closing Date of all the following conditions:
8.1 Representations True and Correct. The representations and
warranties of Purchaser set forth in this Agreement shall be true and correct
at and as of the Closing Date.
8.2 Performance of Covenants. Purchaser shall have performed and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed by or complied with by it prior to
or at the Closing. None of the events or conditions entitling the Stockholders
to terminate this Agreement under Article 9 hereof shall have occurred and be
continuing.
8.3 Resolutions. The Stockholders shall have received certified
copies of resolutions of the Board of Directors of Purchaser.
8.4 Officer's Certificate. Purchaser shall have delivered to the
Stockholders a certificate, dated the Closing Date, signed by the president or
any vice president of Purchaser, stating that (i) the representations and
warranties of Purchaser set forth in this Agreement hereof are true and correct
at and as of the Closing Date, (ii) Purchaser shall have performed and complied
in all material respects with all covenants, agreements and conditions required
by this Agreement to be performed by or complied with by them prior to or at
the Closing and (iii) none of the events or conditions entitling the
Stockholders to terminate this Agreement under Article 9 hereof shall have
occurred and be continuing.
8.5 Governmental Approvals. The waiting period (and any extension
thereof) under the HSR Act shall have expired or been terminated. No statute,
rule or regulation or order of any court or administrative agency shall be in
effect which prohibits the Stockholders from consummating the transactions
contemplated hereby and no suit, action, investigation or other proceeding
shall have been instituted or threatened (other than by a Stockholder, the
Company or any Affiliate thereof) seeking to restrain or prohibit Purchaser or
the Stockholders from consummating the transactions contemplated hereby.
8.6 Legal Opinion. The Stockholders shall have been furnished an
opinion of Fulbright & Jaworski L.L.P., counsel to the Purchaser, (i) that this
Agreement and the transactions contemplated hereby have been authorized by all
necessary action on the part of the Purchaser, (ii) as to the validity and
enforceability of this Agreement and (iii) that the Purchaser has received all
required consents and approvals identified in Section 5.3 or Schedule 5.3 by
Purchaser as being required.
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ARTICLE 9
TERMINATION PRIOR TO CLOSING
9.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) By the mutual written consent of Purchaser and the
Stockholders; or
(b) By either the Stockholders or Purchaser in writing
(provided the terminating party is not otherwise in Default) if the
Closing shall not have occurred on or before April 15, 1997; or
(c) By Purchaser in writing if the Stockholders shall be
in Default and such Default shall not have been cured or remedied; or
(d) By Purchaser in writing if Purchaser shall have
determined based on its and its consultant's review of the Company
Business and the Company and its Subsidiaries that there exists
Environmental Liabilities, environmental conditions or environmental
compliance matters that could reasonably be expected to result in the
expenditure by the Company and its Subsidiaries of more than $250,000
to comply with all applicable Environmental Laws; or
(e) By the Stockholders in writing if Purchaser shall be
in Default and such Default shall not have been cured or remedied; or
(f) By either the Stockholders or Purchaser in writing,
if there shall be in effect an order of a court of competent
jurisdiction prohibiting the consummation of the transactions
contemplated hereby.
9.2 Effect on Obligations. Termination of this Agreement pursuant
to this Article shall terminate all obligations of the parties hereunder,
except for the obligations under Sections 3.11, 5.5 and 6.5 hereof; provided,
however, that termination pursuant to clauses (c) or (e) of Section 9.1 hereof
shall not relieve any defaulting party from any liability to the other parties
hereto.
ARTICLE 10
INDEMNIFICATION
10.1 Indemnification by the Stockholders.
(a) Except as otherwise limited by this Article 10 or
Article 11 hereof, Arai agrees to indemnify, defend and hold Purchaser
and each of its officers, directors, employees, agents, stockholders
and controlling Persons and their respective successors and assigns
harmless from and against and in respect of Damages actually suffered,
incurred or realized by such party (collectively, "Purchaser Losses"),
arising out of or resulting from or relating to any
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misrepresentation, breach of warranty or breach of any covenant or
agreement made or undertaken by Arai in this Agreement or any
misrepresentation in or omission from any other agreement,
certificate, exhibit or writing delivered to the Purchaser pursuant to
this Agreement by Arai, including the Schedules hereto.
(b) Kanematsu agrees to indemnify, defend and hold
Purchaser and each of its officers, directors, employees, agents,
stockholders and controlling Persons and their respective successors
and assigns harmless from and against and in respect of Purchaser
Losses arising out of or resulting from or relating to any
misrepresentation or breach of warranty made by Kanematsu in this
Agreement.
(c) Notwithstanding the foregoing, Arai shall not be
liable under Section 10.1(a) in respect of a misrepresentation or
breach of warranty unless and until the aggregate amount of any
Purchaser Losses for which the Purchaser is entitled to
indemnification from Arai exceeds $500,000; provided, however, (i)
such limitation shall not apply if such Purchaser Losses arise from a
breach of any of the representations set forth in Sections 3.3,
3.4(b)(iv) and (v), 3.11, 4.1, 4.2 and 4.5 and (ii) except for
liability for Purchaser Losses that arise from a breach of any of the
representations and warranties set forth in Sections 3.3, 3.4(b)(iv)
and (v), 3.10, 4.1, 4.2 and 4.5, which shall not be limited, the
liability of Arai for his representations and warranties shall not
exceed $1,500,000 in the aggregate.
10.2 Indemnification by Purchaser. Except as otherwise limited by
this Article 10 and Article 11 hereof, Purchaser agrees to indemnify, defend
and hold the Stockholders and each of their officers, directors, employees,
agents, stockholders and controlling Persons and its successors and assigns
harmless from and against and in respect of Damages actually suffered, incurred
or realized by such party (collectively, "Stockholder Losses"), arising out of
or resulting from any misrepresentation, breach of warranty or breach of any
covenant or agreement made or undertaken by Purchaser in this Agreement or any
misrepresentation in or omission from any other agreement, certificate, exhibit
or writing delivered to Stockholders by Purchaser pursuant to this Agreement.
10.3 Notice and Opportunity to Defend.
(a) If a party seeking indemnification (the "Indemnitee")
becomes aware of any matter that it believes may give rise to an
indemnifiable claim, or asserts any claim that it believes may be
indemnifiable pursuant to Section 10.1 or 10.2 hereof, the Indemnitee
shall give the party obligated to provide indemnification (the
"Indemnifying Party") prompt written notice of such matter or claim,
stating with particularity the nature of such matter or the
aforementioned claim and the amount thereof. Failure to provide such
notice shall not affect the right of the Indemnitee to indemnification
except to the extent such failure shall have resulted in liability to
the Indemnifying Party that could have been actually avoided had such
notice been provided within such required time period.
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(b) If the matter that the Indemnitee believes gives rise
to an indemnifiable claim does not involve a third party claim against
an Indemnitee, the Indemnifying Party shall have 30 days from the date
on which it received notice of such claim pursuant to this Section
10.3 to respond to such notice. If such Indemnifying Party accepts
responsibility or does not respond within such 30-day period,
Indemnifying Party shall promptly pay to the Indemnitee the full
amount of such claim. If the Indemnifying Party rejects any liability
with respect to such claim, it shall give notice of such objection to
the Indemnitee within such 30- day period and the parties shall seek
to resolve such claim by agreement. If such claim is unable to be
resolved by agreement within 60 days following the expiration of such
30-day period mentioned above, the parties shall be entitled to
pursue, without prejudice to any of its rights hereunder, such
remedies as may be available to such party under applicable law.
(c) In the event any action, suit, proceeding or
investigation is brought against the Indemnitee by a third party which
the Indemnitee believes may give rise to an indemnifiable claim
pursuant to Section 10.1 or 10.2 hereof, the Indemnitee shall give the
Indemnifying Party prompt written notice of the commencement of such
action, suit, proceeding or investigation as provided in subsection
(a) of this Section 10.3. Such Indemnifying Party shall have a period
of 30 days after receipt of such notice within which to respond to
such notice. If such Indemnifying Party accepts responsibility, such
Indemnifying Party shall be obligated to compromise or defend such
matter, at its own expense and by counsel chosen by the Indemnifying
Party reasonably acceptable to the Indemnitee. The Indemnitee shall
have the right to participate at its own expense in the defense of
such asserted liability. If such Indemnifying Party does not respond
within such 30-day period or rejects responsibility for such matter in
whole or in part, the Indemnitee shall be free to pursue, without
prejudice to any of its rights hereunder, such remedies as may be
available to such party under applicable law. The Indemnitee shall
cooperate fully with the Indemnifying Party and its counsel in the
defense against any such asserted liability. Any compromise of such
asserted liability by the Indemnifying Party shall require the prior
written consent of the Indemnitee, which shall not be unreasonably
withheld. If, however, the Indemnitee refuses its consent to a bona
fide offer of settlement which involves solely the payment of cash
which the Indemnifying Party wishes to accept, the Indemnitee may
continue to pursue such matter, free of any participation by the
Indemnifying Party, at the sole expense of the Indemnitee. In such
event, the obligation of the Indemnifying Party to the Indemnitee
shall be equal to the lesser of (i) the amount of the offer of
settlement which the Indemnitee refused to accept plus the costs and
expenses of the Indemnitee prior to the date the Indemnifying Party
notifies the Indemnitee of the offer of settlement, and (ii) the
actual out-of-pocket amount the Indemnitee is obligated to pay as a
result of such party's continuing to pursue such matter. An
Indemnifying Party shall be entitled to recover from the Indemnitee
any additional expenses incurred by such Indemnifying Party as a
result of the decision of the Indemnitee to pursue such matter.
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10.4 Express Negligence. THE FOREGOING INDEMNITIES SET FORTH
IN THIS ARTICLE 10 ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN
ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING TEXAS'
EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR
OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE SIMPLE OR GROSS NEGLIGENCE (WHETHER
SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF ANY
OF THE INDEMNIFIED PARTIES.
10.5 Releases. AS OF THE CLOSING, EXCEPT FOR THE OBLIGATIONS
LISTED ON SCHEDULE 10.5 HERETO, WHICH SHALL REMAIN OUTSTANDING, EACH
STOCKHOLDER DOES HEREBY FOR SUCH STOCKHOLDER AND SUCH STOCKHOLDER'S AFFILIATES,
HEIRS, EXECUTORS, ADMINISTRATORS AND LEGAL REPRESENTATIVES REMISE, RELEASE,
ACQUIT AND FOREVER DISCHARGE THE COMPANY AND ITS SUBSIDIARIES AND AFFILIATES,
OFFICERS, DIRECTORS, CONTROLLING PERSONS OR ENTITIES, EMPLOYEES, ATTORNEYS AND
SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE "COMPANY RELEASED PARTIES") OF AND
FROM ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, RESPONSIBILITIES, DISPUTES,
CAUSES OF ACTION AND OBLIGATIONS, LIQUIDATED OR UNLIQUIDATED, MATURED OR
UNMATURED, FIXED OR CONTINGENT, WHICH SUCH STOCKHOLDER AND SUCH STOCKHOLDER'S
AFFILIATES NOW HAVE, OWN OR HOLD OR HAVE AT ANY TIME PREVIOUSLY HAD, OWNED OR
HELD AGAINST THE COMPANY RELEASED PARTIES IN RESPECT OF (I) ANY OBLIGATION,
WHETHER DIRECT OR INDIRECT, WITH RESPECT TO ANY LOAN, INDENTURE, SECURITY
AGREEMENT, MORTGAGE, NOTE OR OBLIGATION WITH RESPECT TO MONEY BORROWED,
INCLUDING ANY GUARANTY THEREOF, (II) ANY CONTRACT, AGREEMENT, WHETHER WRITTEN
OR ORAL, BETWEEN THE COMPANY AND ANY SUBSIDIARY AND SUCH STOCKHOLDER OR ITS
AFFILIATES THAT IS NOT LISTED ON SCHEDULE 10.5 HERETO OR (III) ANY OTHER
EXISTING CLAIM THAT SUCH STOCKHOLDER IS AWARE OF AGAINST ANY RELEASED PARTY OR
ANY OF ITS SUBSIDIARIES, INCLUDING THE KNOWN LIABILITIES CREATED AS A RESULT OF
THE SOLE OR CONTRIBUTORY NEGLIGENCE, GROSS NEGLIGENCE AND WILLFUL ACTS OF ANY
COMPANY RELEASED PARTY; PROVIDED, HOWEVER, THAT ANY CLAIMS, LIABILITIES, DEBTS
OR CAUSES OF ACTION THAT MAY ARISE IN THE CONNECTION WITH THE FAILURE OF ANY OF
THE PARTIES HERETO TO PERFORM ANY OF THEIR OBLIGATIONS HEREUNDER OR UNDER ANY
OTHER AGREEMENT RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY OR FROM ANY
BREACHES BY ANY OF THEM OF ANY REPRESENTATIONS OR WARRANTIES HEREIN OR IN
CONNECTION WITH ANY OF SUCH OTHER AGREEMENTS SHALL NOT BE RELEASED OR
DISCHARGED PURSUANT TO THIS AGREEMENT. SUCH STOCKHOLDER REPRESENTS AND
WARRANTS THAT SUCH STOCKHOLDER HAS NOT PREVIOUSLY ASSIGNED OR TRANSFERRED, OR
PURPORTED TO ASSIGN OR TRANSFER, TO ANY PERSON OR ENTITY WHATSOEVER ALL OR ANY
PART OF THE CLAIMS, DEMANDS, LIABILITIES, RESPONSIBILITIES, DISPUTES, CAUSES OF
ACTION OR OBLIGATIONS RELEASED IN THIS SECTION 10.5. SUCH STOCKHOLDER
COVENANTS AND AGREES THAT SUCH STOCKHOLDER WILL NOT ASSIGN OR TRANSFER TO ANY
PERSON OR ENTITY WHATSOEVER ALL OR ANY PART OF THE CLAIMS, DEMANDS,
LIABILITIES, RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION OR OBLIGATIONS
RELEASED IN THIS SECTION 10.5. SUCH STOCKHOLDER REPRESENTS AND WARRANTS THAT
SUCH STOCKHOLDER HAS READ AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS SECTION
10.5 AND THAT SUCH STOCKHOLDER HAS BEEN REPRESENTED OR ADVISED BY LEGAL COUNSEL
AND OTHER PROFESSIONAL ADVISORS IN CONNECTION WITH THE NEGOTIATION, EXECUTION
AND DELIVERY OF THIS AGREEMENT.
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ARTICLE 11
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
All statements of fact contained in any written statement (including
financial statements), certificate, instrument or document delivered by or on
behalf of a Stockholder pursuant to this Agreement shall be deemed
representations and warranties of that Stockholder. The several
representations and warranties of the parties to this Agreement shall survive
the Closing Date and shall remain in full force and effect for a period of two
years following the Closing Date (except that the representations and
warranties set forth in Sections 3.3, 3.4, 3.10, 3.11, 4.1, 4.2 and 4.5 shall
survive the Closing Date without limitation) (the period during which the
representations and warranties shall survive being referred to herein with
respect to such representations and warranties as the "Survival Period"), and
shall be effective with respect to any inaccuracy therein or breach thereof
(and a claim for indemnification under Article 10 hereof may be made thereon)
if a written notice asserting the claim shall have been duly given in
accordance with Article 10 hereof within the Survival Period with respect to
such matter. All covenants and agreements contained herein shall survive
without limitation; provided, however, that such survival shall not operate to
expand the indemnification obligations set forth in Article 10. Any claim for
indemnification made during the Survival Period shall be valid and the
representations and warranties relating thereto shall remain in effect for
purposes of such indemnification notwithstanding such claim may not be resolved
within the Survival Period. All representations, warranties and covenants and
agreements made by the parties shall not be affected by any investigation
heretofore or hereafter made by and on behalf of any of them and shall not be
deemed merged into any instruments or agreements delivered in connection with
this Agreement or otherwise in connection with the transactions contemplated
hereby.
ARTICLE 12
MISCELLANEOUS
12.1 Entire Agreement. This Agreement and the other agreements
contemplated hereby constitute the sole understanding of the parties with
respect to the matters provided for herein and supersedes any previous
agreements and understandings between the parties with respect to the subject
matter hereof. No amendment, modification or alteration of the terms or
provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by Purchaser and the affected Stockholders.
12.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns. Prior to the Closing Date, this
Agreement may not be assigned by any party without the prior written consent of
the other party hereto, except that the Purchaser may, at its election, assign
its rights under this Agreement to any direct or indirect wholly owned
subsidiary. Notwithstanding the foregoing, no assignment of
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this Agreement or any of the rights or obligations hereof by Purchaser or by
the Stockholders, as the case may be, shall relieve Purchaser or the
Stockholders of its obligations under this Agreement and, upon any such
assignment occurring prior to the Closing, the representations, warranties,
covenants and agreements contained in this Agreement shall be deemed to have
been made by Purchaser's assignee or by the Stockholders's assignee as well as
by Purchaser or by the Stockholders, as the case may be.
12.3 Arbitration.
(a) In the event there shall exist any dispute or
controversy between the Purchaser and the Stockholders with respect to
this Agreement or any matter relating hereto or the transactions
contemplated hereby, the parties hereto agree to seek to resolve such
dispute or controversy by mutual agreement. If such dispute or
controversy is unable to be resolved by agreement within 60 days
following notice by Purchaser or the Stockholders of the nature of
such dispute or controversy setting forth in reasonable detail the
circumstances and basis of such dispute or controversy, either
Purchaser or the Stockholders, as the case may be, may require that
such dispute or controversy be resolved by binding arbitration
pursuant to the provisions of this Section 12.3. If a party elects to
submit such matter to arbitration, such party shall provide notice to
the other party of its election to do so, which notice shall name one
arbitrator. Within 10 days after the receipt of such notice, the
other party shall name a second arbitrator. The two arbitrators so
appointed shall name a third arbitrator, or failing to do so, a third
arbitrator shall be appointed pursuant to the Commercial Arbitration
Rules of the American Arbitration Association. Each arbitrator
selected to act hereunder shall be qualified by education and
experience to pass on the particular question in dispute. The
arbitrators shall resolve all disputes in controversy in accordance
with the applicable substantive law. All statutes of limitations that
would otherwise be applicable shall apply to any arbitration
proceeding.
(b) The arbitrators appointed pursuant to this Section
12.3 shall promptly hear and determine (after due notice and hearing
and giving the parties reasonable opportunity to be heard) the
questions submitted, and shall render their decision within 60 days
after appointment of the third arbitrator or as soon as practical
thereafter. If within such period a decision is not rendered by the
board or a majority thereof, new arbitrators may be named and shall
act hereunder at the election of either party in like manner as if
none had previously been named. The decision of the arbitrators, or a
majority thereof, made in writing, shall be final and binding upon the
parties hereto as to the questions submitted, and each party shall
abide by such decision.
(c) All expenses of arbitration, including reasonable
compensation to the arbitrators and expenses of parties' counsel,
witnesses and employees shall be borne as determined by the
arbitrators.
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(d) Nothing contained herein shall prohibit any party
from seeking injunctive or other equitable relief pending any decision
in arbitration or from enforcing any order or decision by the
arbitrators in any court or other appropriate forum. For purposes of
injunctive relief, orders in aid of arbitration and entry of the
arbitrator's award:
(i) each of the parties hereto irrevocably
consents to the non-exclusive jurisdiction of, and venue in,
any state court located in Harris County, Texas or any federal
court sitting in the Southern District of Texas in any suit,
action or proceeding seeking injunctive relief, arising out
of or relating to this Agreement or any of the other
agreements contemplated hereby and any other court in which a
matter that may result in a claim for indemnification
hereunder by an Indemnitee may be brought with respect to any
claim for indemnification by an Indemnitee;
(ii) each of the parties hereto waives, to the
fullest extent permitted by law, any objection that it may now
or hereafter have to the laying of venue of any suit, action
or proceeding seeking injunctive relief, orders in aid of
arbitration or entry of an arbitration arising out of or
relating to this Agreement or any of the other agreements
contemplated hereby brought in any state court located in
Harris County, Texas or any federal court sitting in the
Southern District of Texas or any other court in which a
matter that may result in a claim for indemnification
hereunder by an Indemnitee may be brought with respect to any
claim for indemnification by an Indemnitee, and further
irrevocably waive any claim that any such suit, action or
proceeding brought in any such court has been brought in an
inconvenient forum; and
(iii) each of the parties hereto irrevocably
designates, appoints and empowers CT Corporation System, Inc.
and any successor thereto as its designee, appointee and agent
to receive, accept and acknowledge for and on its behalf, and
in respect of its property, service of any and all legal
process, summons, notices and documents which may be served in
any suit, action or proceeding arising out of or relating to
this Agreement or any of the other agreements contemplated
hereby.
12.4 Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, other than as expressly provided for herein,
each of the parties hereto shall pay the fees and expenses of its respective
counsel, accountants and other experts, and all other expenses incurred by such
party incident to the negotiation, preparation and execution of this Agreement
and consummation of the transactions contemplated hereby.
12.5 Effect of Due Diligence. No investigation by Purchaser, its
Affiliates, agents or advisers into the business, operations, Assets and
condition of the Company or any of its Subsidiaries shall diminish in any way
the effect of any representations or warranties made by the Stockholders in
this Agreement or shall relieve the Stockholders of any of their respective
obligations under this Agreement.
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12.6 Taking of Necessary Action. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees, subject to
applicable laws, to use all reasonable best efforts promptly to take or cause
to be taken all action and to promptly do or cause to be done all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Each party shall cooperate with the other in good faith to help the other
satisfy its obligations hereunder. If at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, or to vest Purchaser with full title to and benefits of the Stock,
the proper officers or directors of the Stockholders shall take all such
necessary action.
12.7 Transfer Taxes. Any stock transfer, real property transfer,
sales or other like taxes or recording fees payable as a result of the
transactions contemplated hereby, if any, shall be paid by the Stockholders.
The Stockholders and Purchaser agree to cooperate with each other in the making
of all filings required in connection with any transfer Taxes.
12.8 Invalidity. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
12.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
12.10 Headings. The headings of the Sections and paragraphs of this
Agreement are included for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
12.11 Construction and References. Words used in this Agreement,
regardless of the number or gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context shall require. Unless
otherwise specified, all references in this Agreement to Sections, paragraphs
or clauses are deemed references to the corresponding Sections, paragraphs or
clauses in this Agreement, and all references in this Agreement to Schedules or
Exhibits are references to the corresponding Schedules or Exhibits attached to
this Agreement.
12.12 Modification and Waiver. Any of the terms or conditions of
this Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof. No waiver of any of the provisions of this
Agreement shall be deemed
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to or shall constitute a waiver of any other provisions hereof (whether or not
similar).
12.13 Notices. Any notice, request, instruction or other document
to be given hereunder by any party hereto to any other party shall be in
writing and delivered personally, via telecopy (with receipt confirmed) or sent
by registered or certified mail, postage prepaid:
if to the Stockholders, to
Mr. Seigo Arai
661 Bering Dr., Apt. 601
Houston, Texas 77057
Facsimile: (713) 937-3756
Telephone: (713) 937-1800
Mr. Masayuki Shimojima
Kanematsu USA Inc.
5847 San Felipe, Suite 2121
Houston, Texas 77056
Facsimile: (713) 975-7966
Telephone: (713) 975-7200
with copies to:
Hoffman Sutterfield & Ensenat
Texas Commerce Tower
600 Travis, Suite 2860
Houston, Texas 77002
Attention: David M. Cowan
Facsimile: (713) 227-2733
Telephone: (713) 227-5505
if to the Purchaser, to:
Energy Ventures, Inc.
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Attention: James G. Kiley
Facsimile: (713) 297-8488
Telephone: (713) 297-8400
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with copies to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attention: Curtis W. Huff
Facsimile: (713) 651-5246
Telephone: (713) 651-5151
or at such other address for a party as shall be specified by like notice. Any
notice which is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agent for notices hereunder). Any notice which
is addressed and mailed in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed at the
close of business, local time of the recipient, on the third day after the day
it is so placed in the mail.
12.14 Public Announcements. Neither the Stockholders (nor any of
their Affiliates, including the Company) nor Purchaser (nor any of its
Affiliates) shall make any public statements, including, without limitation,
any press releases, with respect to this Agreement and the transactions
contemplated hereby without the prior written consent of the other party (which
consent may not be unreasonably withheld), except as may be required by law.
12.15 Governing Law; Interpretation. This Agreement shall be
construed in accordance with and governed by the laws of Texas applicable to
agreements made and to be performed in such jurisdiction.
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IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed on its behalf as of the date first above written.
STOCKHOLDERS
/s/ Seigo Arai
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SEIGO ARAI
KANEMATSU USA INC.
By: /s/ Noboru Kinoshita
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Name: Noboru Kinoshita
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Title: President
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ENERGY VENTURES, INC.
By: /s/ James G. Kiley
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James G. Kiley
Vice President and
Chief Financial Officer
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<PAGE> 44
As permitted by Item 601(b)(2) of Regulation S-K, the Company has not
filed any schedules with this Exhibit No. 2.1. Listed below is a brief
description of the omitted schedules. The Company agrees to furnish
supplementally a copy of any of such omitted schedules to the Commission upon
request.
<TABLE>
<CAPTION>
Schedules
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<S> <C>
2.3 Purchase Price Paid to Stockholders
3.4 List of Subsidiaries
3.5 List of Approvals, Authorizations and Consents Needed by Sellers
3.6 List of Litigation
3.7 List of Material Contracts
3.8 List of Employee Benefit Plans
3.9 Taxes
3.10 List of Property
3.12 Environmental Matters
3.13 Financial Statements
3.14 Absence of Certain Transactions
4.5 List of Stockholders
5.3 List of Approvals, Authorizations and Consents Needed by Purchaser
6.1 Conduct of Business Pending Closing
6.8(b) Employee Transaction Bonuses
6.8(c) Employee Stay Bonuses
10.5 Outstanding Obligations
</TABLE>
<PAGE> 1
EXHIBIT 99.1
EVI TO ACQUIRE TA INDUSTRIES FOR $64 MILLION
February 24, 1997, Houston, Texas - Energy Ventures, Inc. (NYSE-EVI) today
announced the signing of a definitive agreement to purchase the stock of TA
Industries, Inc. for total consideration of approximately $64 million in cash
and assumed debt.
TA Industries had total revenues for the year ended December 31, 1996 of
approximately $80 million. TA Industries designs, manufactures and markets
worldwide a complete line of tubular couplings and accessories such as pup
joints, crossovers, flow couplings, blast joints and engineered downhole
equipment. The product lines are marketed under the brand names Texas Arai and
Tube-Alloy and are believed to be the industry's market leader in their
segments.
TA Industries product lines are an integral component of oilfield tubing,
casing and liner strings when a well is first completed and throughout the
producing life of the well. They are particularly critical in wells requiring
tubulars with premium specifications. These products for use in premium
tubular applications are typically custom designed with proprietary technology
and very high manufacturing tolerances. The term premium, as a qualifier to
tubulars, refers primarily to the complex engineered connections that tie
together the various components of the tubing, casing and liner strings. It
additionally implies a combination of chemistry grade and fabrication methods.
Premium tubulars are used in difficult downhole environment brought about by
depth, temperature, pressure, corrosion and directional angle. Such wells are
generally found offshore and more particularly in deep waters where almost all
wells require premium tubulars. The Company believes that wells requiring
premium tubulars are enjoying a multi year secular growth trend.
Upon completion of the transaction, Texas Arai and Tube-Alloy will become
divisions of Grant Prideco, EVI's drilling tools and premium tubulars segment.
Texas Arai and Tube-Alloy will join the Company's growing business in premium
tubulars with its Atlas Bradford (premium connection), TCA (premium casing &
liner) and Grant Prideco (premium tubing) divisions. The combination will
create the only integrated supplier of premium tubular products and services in
the world. This coordinated approach to tubular applications will be of
particular importance internationally, where time and logistical considerations
are an integral part of every purchase decision. The acquisition is also
expected to provide significant manufacturing synergies with TCA, the premium
casing division acquired by EVI in August 1996. Through these synergies, the
Company expects to realize cost savings between $1.5 and $2.5 million per year,
as well as being able to reduce current inventory levels at TA Industries by up
to $8 million.
The acquisition of TA Industries is subject to various conditions, including
the receipt of all required regulatory approvals and expiration of all waiting
periods. The acquisition is expected to close as soon as possible after the
receipt of the necessary approvals.
EVI is an international manufacturer of engineered oilfield products. The
Company manufactures drilling tools, premium tubulars and production equipment.
Contact:
James G. Kiley
Vice President and
Chief Financial Officer
(713) 297-8400
