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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 8, 1999
REGISTRATION NUMBER 333-
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SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WEATHERFORD INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
04-2515019
(I.R.S. Employer Identification No.)
515 POST OAK BOULEVARD, SUITE 600
HOUSTON, TEXAS 77027
(713) 693-4000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
BERNARD J. DUROC-DANNER
WEATHERFORD INTERNATIONAL, INC.
515 POST OAK BOULEVARD, SUITE 600
HOUSTON, TEXAS 77027
(713) 693-4000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
CURTIS W. HUFF
WEATHERFORD INTERNATIONAL, INC.
515 POST OAK BOULEVARD, SUITE 600
HOUSTON, TEXAS 77027
(713) 693-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $1.00 par
value....................... 446,838 $34 $15,192,492 $4,224
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) of the Securities Act of 1933 and based upon the
average of the high and low sale prices of the Common Stock as reported by
the New York Stock Exchange on June 2, 1999.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JUNE 8, 1999
PROSPECTUS
446,838 SHARES
WEATHERFORD INTERNATIONAL, INC.
COMMON STOCK
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The selling stockholders of Weatherford International, Inc. listed on page
8 may offer and resell up to 446,838 shares of our common stock under this
prospectus. We will not receive any of the proceeds from sales of shares by the
selling stockholders.
Our common stock is traded on the New York Stock Exchange under the symbol
"WFT". On June 7, 1999, the last reported sales price for our common stock on
the New York Stock Exchange was $39.44 per share.
The selling stockholders may sell these shares from time to time on the New
York Stock Exchange or otherwise. They may sell the shares at prevailing market
prices or at prices negotiated with buyers. The selling stockholders will be
responsible for their legal fees and any commissions or discounts due to brokers
or dealers. The amount of those commissions or discounts will be negotiated
before the sales. We will pay all of the other offering expenses.
Our principal executive offices are located at 515 Post Oak Boulevard,
Suite 600, Houston, Texas 77027. Our telephone number is (713) 693-4000.
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INVESTING IN THESE SHARES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 5.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is June , 1999.
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. NEITHER WE
NOR THE SELLING STOCKHOLDERS HAVE AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. THE SELLING
STOCKHOLDERS ARE OFFERING TO SELL, AND SEEKING OFFERS TO BUY, SHARES OF COMMON
STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. UNDER NO
CIRCUMSTANCES SHOULD THE DELIVERY TO YOU OF THIS PROSPECTUS OR ANY SALE MADE
PURSUANT TO THIS PROSPECTUS CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF ANY TIME AFTER THE DATE OF THIS
PROSPECTUS. IN THIS PROSPECTUS, WHEN WE REFER TO WEATHERFORD AND USE PHRASES
SUCH AS "WE" AND "US", WE ARE GENERALLY REFERRING TO WEATHERFORD INTERNATIONAL,
INC. AND ITS SUBSIDIARIES AS A WHOLE OR ON A DIVISION BASIS DEPENDING ON THE
CONTEXT IN WHICH THE STATEMENTS ARE MADE.
TABLE OF CONTENTS
<TABLE>
<S> <C>
WHERE YOU CAN FIND MORE INFORMATION......................... 2
FORWARD-LOOKING STATEMENTS.................................. 3
RISK FACTORS................................................ 5
SELLING STOCKHOLDERS........................................ 7
PLAN OF DISTRIBUTION........................................ 8
LEGAL MATTERS............................................... 9
EXPERTS..................................................... 9
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934. You may inspect those reports, proxy statements
and other information at the Public Reference Section of the SEC at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and the
Regional Offices of the SEC at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, New York, New York
10048. Please call the SEC at 1-800-SEC-0300 for further information on the
public reference rooms. You may also obtain copies of those materials from the
Public Reference Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
The SEC maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding us. You can also inspect and copy those reports,
proxy and information statements and other information at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, on which
our common stock is listed.
We have filed with the SEC a registration statement on Form S-3 covering
the shares offered by this prospectus. This prospectus is only a part of the
registration statement and does not contain all of the information in the
registration statement. For further information on us and the common stock being
offered, please review the registration statement and the exhibits that are
filed with it. Statements made in this prospectus that describe documents may
not necessarily be complete. We recommend that you review the documents that we
have filed with the registration statement to obtain a more complete
understanding of those documents.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information in this prospectus. This prospectus
incorporates by reference the documents set forth below that we previously filed
with the SEC. These documents contain important information about us.
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The following documents that we have filed with the SEC (File No.1-13086)
are incorporated by reference into this prospectus:
- Our Annual Report on Form 10-K for the year ended December 31, 1998;
- Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
- Our Current Report on Form 8-K dated February 4, 1999;
- Our Current Report on Form 8-K dated February 18, 1999;
- Our Current Report on Form 8-K dated April 29, 1999;
- Our Current Report on Form 8-K dated May 21, 1999; and
- The description of our common stock contained in our Registration
Statement on Form 8-A (filed May 19, 1994) and as amended by our
Registration Statement on Form S-4, as amended (Registration No.
333-58741), including any amendment or report filed for the purpose of
updating such description.
All documents that we file pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 after the date of this prospectus will be
deemed to be incorporated in this prospectus by reference and will be a part of
this prospectus from the date of the filing of the document. Any statement
contained in a document incorporated or deemed to be incorporated by reference
in this prospectus will be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained in this prospectus or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference in this prospectus modifies or supersedes that
statement. Any statement that is modified or superseded will not constitute a
part of this prospectus, except as modified or superseded.
We will provide without charge to each person, including any beneficial
owner, to whom a copy of this prospectus has been delivered, upon written or
oral request, a copy of any or all of the documents incorporated by reference in
this prospectus, other than the exhibits to those documents, unless the exhibits
are specifically incorporated by reference into the information that this
prospectus incorporates. You should direct a request for copies to us at 515
Post Oak Boulevard, Suite 600, Houston, Texas 77027, Attention: Secretary
(telephone number: (713) 693-4000). If you have any other questions regarding
us, please contact our Investor Relations Department in writing (515 Post Oak
Blvd., Suite 600, Houston, Texas 77027) or by telephone ((713) 693-4000) or
visit our website at www.weatherford.com.
FORWARD-LOOKING STATEMENTS
This prospectus and our other filings with the SEC and public releases
contain statements relating to our future results, including certain projections
and business trends. We believe these statements constitute "forward-looking
statements" as defined in the Private Securities Litigation Reform Act of 1995.
Certain risks and uncertainties may cause actual results to be materially
different from projected results contained in forward-looking statements in this
prospectus and in our other disclosures. These risks and uncertainties include,
but are not limited to, the following:
A FURTHER DOWNTURN IN MARKET CONDITIONS COULD AFFECT PROJECTED RESULTS
Any unexpected material changes in oil and gas prices or other market
trends would likely affect the forward-looking information contained in this
prospectus. Our estimates as to future results and industry trends make
assumptions regarding the future prices of oil and gas and their effect on the
demand and pricing of our products and services. In analyzing the market and its
impact on us for 1999, we have made the following assumptions:
- The recent increase in the price of oil will not have an immediate
favorable impact on our business.
- Average natural gas prices for 1999 will remain at or near their current
levels.
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- World demand for oil will be up only marginally or flat.
- North American and international rig counts will remain at their current
low levels.
- Future growth in the industry will be dependent on technological advances
that can reduce the costs of exploration and production, and
technological improvements in tools used for re-entry, thru-tubing and
extended reach drilling as well as artificial lift technologies will be
important to our future.
We have based these assumptions on various macro-economic factors, and
actual market conditions could vary materially from those assumed.
A CONTINUATION OF THE LOW RIG COUNT COULD ADVERSELY AFFECT THE DEMAND FOR OUR
PRODUCTS AND SERVICES
Our operations were materially affected by the decline in the rig count
during 1998 and 1999 to date. Although the North American and international rig
counts are at historical or near historical lows, a continuation of the rig
count at its current level for a prolonged period of time would adversely affect
our results as demand for oil related products and services would continue to
fall because of the uncertainty relating to the future prices. In addition, any
further material declines in the current worldwide rig count or drilling
activity would likely further reduce the demand for our drilling products and
services. Our forward-looking statements regarding our drilling products assume
there will not be any further material declines in the worldwide rig count, in
particular the foreign rig count.
PROJECTED COST SAVINGS COULD BE INSUFFICIENT
During 1998 and 1999 to date, we implemented a number of programs intended
to reduce costs and align our cost structure with the current market
environment. Our forward-looking statements regarding cost savings and their
impact on our business assume these measures will generate the savings expected.
However, if the markets continue to decline, we may have to take additional
actions to achieve the desired savings.
WEATHERFORD'S SUCCESS IS DEPENDENT UPON TECHNOLOGICAL ADVANCES
Our ability to succeed with our long-term growth strategy is dependent on
the technological competitiveness of our product and service offerings. A
central aspect of our growth strategy is to enhance the technology of our
products and services, to expand the markets for many of our products through
the leverage of our worldwide infrastructure and to enter new markets and expand
in existing markets with technologically advanced value-added products. Our
forward-looking statements have assumed only a small amount of near-term growth
from these new products and services.
UNEXPECTED YEAR 2000 PROBLEMS COULD HAVE AN ADVERSE FINANCIAL IMPACT
We have not fully determined the impact of Year 2000 on our systems and
products. It is possible that unexpected problems associated with the Year 2000
could arise during the implementation of our Year 2000 program that could have a
material adverse effect on our business, financial condition and results of
operations. We are currently in the strategy development, implementation and
testing phases of our Year 2000 program and expect it to be completed by the
fourth quarter of 1999.
ECONOMIC DOWNTURN IN ASIA AND SOUTH AMERICA COULD ADVERSELY AFFECT DEMAND FOR
PRODUCTS AND SERVICES
The economic downturn in Asia has begun to affect the economies in other
regions of the world, including South America and the Former Soviet Union. To
date, the economies in the United States and Europe have not been materially
affected. If the United States or European economies were to begin to decline or
if the economies of South America or Asia were to experience further material
problems, the demand and price for oil and gas and our products and services
could fall further and adversely affect our
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revenues and income. We have assumed that a worldwide recession will not occur
as a result of the economic downturn in Asia and South America. A material
decline in the Chinese economy or devaluation of its currency could cause
further deterioration to the Asian and world economies.
CURRENCY FLUCTUATIONS COULD HAVE A MATERIAL ADVERSE FINANCIAL IMPACT
A material decline in currency rates in our markets could affect our future
results as well as affect the carrying values of our assets. World currencies
have been subject to much volatility. Our forward-looking statements assume no
material impact from changes in currencies.
CHANGES IN GLOBAL TRADE POLICIES COULD ADVERSELY IMPACT OPERATIONS
Changes in global trade policies in our markets could impact our operations
in these markets. We have assumed that there will be no material changes in
global trading policies.
UNEXPECTED LITIGATION AND LEGAL DISPUTES COULD HAVE A MATERIAL ADVERSE FINANCIAL
IMPACT
If we experience unexpected litigation or unexpected results in our
existing litigation having a material effect on results, the accuracy of the
forward-looking statements would be affected. Our forward-looking statements
assume that there will be no such unexpected litigation or results.
Finally, our future results will depend upon various other risks and
uncertainties, including, but not limited to, those detailed in our other
filings with the SEC. For additional information regarding risks and
uncertainties, see our other current year filings with the SEC under the
Securities Exchange Act of 1934 and the Securities Act of 1933. We will
generally update our assumptions in our filings as circumstances require.
RISK FACTORS
An investment in our common stock involves various risks. When considering
your investment in our company you should consider carefully the following
factors, together with the information described elsewhere in this prospectus.
CONTINUED LOW PRICES FOR OIL WILL ADVERSELY AFFECT THE DEMAND FOR OUR PRODUCTS
AND SERVICES
Low oil prices adversely affect demand throughout the oil and natural gas
industry, including the demand for our products and services. As prices decline,
we are affected in two significant ways. First, the funds available to our
customers for the purchase of goods and services declines. Second, exploration
and drilling activity declines as marginally profitable projects become
uneconomic and either are delayed or eliminated. Accordingly, as long as oil
prices remain low, our revenues and income will be adversely affected. The
current market conditions have affected our business in various ways. Our
artificial lift business, which is heavily dependent on North American
production, experienced continuous declines in revenue throughout 1998 and the
first quarter of 1999. Our drilling products division has experienced a
significant decline in new orders of drill pipe and other drill stem products
and tubular sales have fallen as completion activity slowed and tubular
distributors reduced inventories. Sales in 1999 for our drill stem products
could be down by more than 50% from 1998. The level of decline will be dependent
on the timing of any increase of drilling activity and the amount of time it
takes for our customers' drill pipe and other tubular inventories to be reduced.
Our completion and oilfield services business has experienced declines in line
with the general reduction in industry activity, with the greatest declines
occurring in the United States markets. Our compression services business has
only been marginally affected by the recent declines in market conditions
because its business is based on levels of natural gas development and
production, which has been more stable than oil production.
Our businesses will continue to be affected by industry conditions,
including those conditions and factors described under "Forward-Looking
Statements".
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CUSTOMER CREDIT RISKS
Substantially all of our customers are engaged in the energy industry. This
concentration of customers may impact our overall exposure to credit risk,
either positively or negatively, in that customers may be similarly affected by
changes in economic and industry conditions. Many of our customers have slowed
the payment of their accounts in light of current industry conditions and others
have experienced greater financial difficulties in meeting their payment terms.
We perform ongoing credit evaluations of our customers and do not generally
require collateral in support of our trade receivables. We maintain reserves for
potential credit losses, and actual losses have historically been within our
expectations.
DISRUPTIONS IN FOREIGN OPERATIONS COULD ADVERSELY AFFECT OUR INCOME
Like most multinational oilfield service companies, we have operations in
certain international areas, including parts of the Middle East, North and West
Africa, Latin America, the Asia-Pacific region and the Commonwealth of
Independent States, that are inherently subject to risks of war, local economic
conditions, political disruption, civil disturbance and policies that may:
- disrupt our operations and oil and gas exploration and production
activities;
- restrict the movement of funds;
- lead to U.S. government or international sanctions; and
- limit access to markets for periods of time.
Historically, the economic impact of such disruptions has been temporary,
and oil and gas exploration and production activities have resumed eventually in
relation to market forces. Certain areas, including the CIS, Algeria, Nigeria,
parts of the Middle East, the Asia-Pacific region and Latin America, have been
subjected to political disruption which has negatively impacted results of
operations following such events.
Disruptions may occur in our foreign operations, and losses may occur that
will not be covered by insurance. Drill pipe and other products are manufactured
for us by Oil Country Tubular Limited in India under a long-term exclusive
manufacturing arrangement. Although we have sought to minimize the risks of this
operation through a manufacturing versus ownership arrangement, we are providing
OCTL with a substantial amount of raw materials, inventory and working capital
for the products it manufactures for us. Our Indian operations have been
adversely affected by the downturn of the economies in the eastern hemisphere.
Operations in India are subject to various political and economic risks as well
as financial risks with respect to OCTL. We have recently substantially
curtailed our operations in India and we expect these operations to continue to
be curtailed through the end of 1999. A termination or complete shutdown of this
operation in light of current market conditions or political factors could have
an adverse effect on our income and results.
OUR PRODUCTS AND SERVICES ARE SUBJECT TO OPERATIONAL, LITIGATION AND
ENVIRONMENTAL RISKS
Our products are used for the exploration and production of oil and natural
gas. These operations are subject to hazards inherent in the oil and gas
industry that can cause personal injury or loss of life, damage to or
destruction of property, equipment, the environment and marine life, and
suspension of operations. These hazards include fires, explosions, craterings,
blowouts and oil spills. Litigation arising from an accident at a location where
our products or services are used or provided may result in our being named as a
defendant in lawsuits asserting potentially large claims.
In the ordinary course of business, we become the subject of various claims
and litigation. We maintain insurance to cover many of our potential losses and
we are subject to various self-retentions and deductibles with respect to our
insurance. Although we are subject to various ongoing items of litigation, we do
not believe that any of the items of litigation that we are currently subject to
will result in any material uninsured losses to us. It is, however, possible
that an unexpected judgment could be rendered
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against us in cases in which we could be uninsured and beyond the amounts that
we currently have reserved or anticipate incurring for that matter.
We are also subject to various federal, state and local laws and
regulations relating to the energy industry in general and the environment in
particular. Environmental laws have in recent years become more stringent and
have generally sought to impose greater liability on a larger number of
potentially responsible parties. While we are not currently aware of any
situation involving an environmental claim that would likely have a material
adverse effect on our business, it is always possible that an environmental
claim with respect to one or more of our current businesses or a business or
property that one of our predecessors owned or used could arise that could
involve the expenditure of a material amount of funds.
CURRENCY DEVALUATION AND FLUCTUATION RISKS
A single European currency ("the Euro") was introduced on January 1, 1999,
at which time the conversion rates between legacy currencies and the Euro were
set for 11 participating member countries. However, the legacy currencies in
those countries will continue to be used as legal tender through January 1,
2002. Thereafter, the legacy currencies will be canceled, and the Euro bills and
coins will be used in the 11 participating countries. We are currently
evaluating the effect of the Euro on our consolidated financial statements and
our business operations; however, we do not foresee that the transition to the
Euro will have a significant impact.
Over 50% of our net assets are located outside the United States and are
carried on our books in local currencies. Changes in those currencies in
relation to the U.S. dollar result in translation adjustments which are
reflected as accumulated other comprehensive loss in the stockholders' equity on
our balance sheet.
OUR COMMON STOCK HAS FLUCTUATED HISTORICALLY
Historically, and in recent months in particular, the market price of
common stock of companies engaged in the oil and gas industry has been highly
volatile. Likewise, the market price of our common stock has varied
significantly in the past. News announcements and changes in oil and natural gas
prices, changes in the demand for oil and natural gas exploration and changes in
the supply and demand for oil and natural gas have all been factors that have
affected the price of our common stock.
SELLING STOCKHOLDERS
This prospectus is part of a registration statement that we filed pursuant
to registration rights granted to the selling stockholders under agreements we
entered into in connection with the following:
- the acquisition by our Completion and Oilfield Services Division of
substantially all of the assets of ECD/Northwest, Inc.; and
- the acquisition by our Drilling Products Division of certain of the
assets of Texas Pipe Works, Inc.
Pursuant to the terms of the acquisition agreements, we will pay all
expenses of registering the shares under the Securities Act of 1933, including
all registration and filing fees, printing expenses and the fees and
disbursements of our counsel and accountants. The agreements also provide that
we will indemnify the selling stockholders against certain civil liabilities,
including liabilities under the Securities Act of 1933, or will contribute to
payments the selling stockholders may be required to make in respect thereof.
The selling stockholders will pay all fees and disbursements of their counsel
and all brokerage fees, commissions and expenses for any shares that they sell.
We expect to withdraw registration of any unsold shares on or shortly after May
27, 2000, when we expect the shares will be eligible for public sale pursuant to
the exemption from registration provided by Rule 144 under the Securities Act of
1933.
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The following table sets forth the beneficial ownership of common stock by
each selling stockholder as of June 8, 1999, all of which may be sold pursuant
to this prospectus:
<TABLE>
<CAPTION>
NAME OF NUMBER OF PERCENT OF
SELLING STOCKHOLDER SHARES OWNED(1) OUTSTANDING SHARES
- ------------------- --------------- ------------------
<S> <C> <C>
Clearwater Holdings, Inc............................. 4,463 *
Kevin W. Smith....................................... 55,843 *
Todd R. Thomas....................................... 32,688 *
James E. Wilkes...................................... 41,479 *
Ted M. Wilkes........................................ 27,240 *
Argosy Investment Partners, L.P. .................... 20,707 *
North Atlantic Venture Fund II LP.................... 14,791 *
ECD/Northwest, Inc.(2)............................... 197,212 *
Mark Blanks, Jr. .................................... 52,415 *
</TABLE>
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* Less than 1%
(1) Because the selling stockholders may offer all or a portion of the shares
pursuant to this prospectus, we cannot estimate to the number of shares of
our common stock that the selling stockholders will hold upon termination of
any sales.
(2) All of the shares beneficially owned by ECD/Northwest, Inc. are currently
held in escrow.
We currently employ Todd R. Thomas and Ted M. Wilkes at annual base
salaries of $102,900 and $86,004. In addition, pursuant to our employee stock
option plan, Todd R. Thomas holds an option to purchase 25,000 shares of our
common stock and Ted M. Wilkes holds an option to purchase 6,000 shares of our
common stock. Within the past three years, none of the selling stockholders has
held any position, office or other material relationship with us or any of our
predecessors or affiliates, except as noted above.
PLAN OF DISTRIBUTION
The shares offered under this prospectus may be sold by the selling
stockholders from the date of this prospectus until May 27, 2000. The selling
stockholders may sell the shares on the New York Stock Exchange or otherwise, at
market prices or at negotiated prices. They may sell shares by one or a
combination of the following:
- a block trade in which a broker or dealer will attempt to sell the shares
as agent, but may position and resell a portion of the block as principal
to facilitate the transaction;
- purchases by a broker or dealer as principal and resale by the broker or
dealer for its account pursuant to this prospectus;
- ordinary brokerage transactions and transactions in which a broker
solicits purchasers; and
- privately negotiated transactions.
Brokers or dealers engaged by the selling stockholders may arrange for
other brokers or dealers to participate in sales of shares. Brokers or dealers
will receive commissions or discounts from selling stockholders in amounts to be
negotiated prior to the sale. The selling stockholders and any broker-dealers
that participate in the distribution may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933, and any proceeds or commissions
received by them or any profits on the resale of shares sold by broker-dealers,
may be deemed to be underwriting discounts and commissions.
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When any of the selling stockholders notifies us of a particular offering
of common stock under this prospectus, we will file a prospectus supplement, if
required by the Securities Act of 1933, setting forth:
- the number of shares being offered and the terms of the offering,
including the purchase price;
- the name of each of the participating broker-dealers or agents;
- the purchase price paid for the shares purchased from the selling
stockholders; and
- any items constituting compensation from the selling stockholders.
We will not receive any of the proceeds from the sale of the shares offered
by this prospectus.
LEGAL MATTERS
Curtis W. Huff, our Senior Vice President, General Counsel and Secretary,
has advised us with respect to the validity of the shares of common stock
offered by this prospectus. Pursuant to an agreement between us and Mr. Huff,
Mr. Huff holds 75,000 restricted shares of common stock and an option to
purchase 100,000 shares of common stock. Mr. Huff also holds an option to
purchase an additional 100,000 shares of common stock pursuant to our employee
stock option plan.
EXPERTS
The consolidated financial statements of Weatherford International, Inc.
and the related consolidated financial statement schedules as of December 31,
1998 and 1997 and for each of the three years in the period ended December 31,
1998, incorporated by reference in this prospectus and elsewhere in the
registration statement, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated by reference in reliance upon the authority of Arthur Andersen LLP
as experts in giving said reports.
Ernst & Young LLP, independent auditors, have audited Dailey International
Inc.'s consolidated balance sheets as of December 31, 1998 and 1997, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the year ended December 31, 1998, the eight month period ended
December 31, 1997 and for each of the two years in the period ended April
30,1997, as set forth in their report, which is incorporated by reference in
this prospectus and elsewhere in the registration statement. These financial
statements are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
9
<PAGE> 11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with this offering are:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 4,224
New York Stock Exchange Listing Fee......................... 1,500
Legal Fees and Expenses..................................... --
Accounting Fees and Expenses................................ 2,500
Blue Sky Fees and Expenses (including legal fees)........... 1,000
Miscellaneous...............................................
TOTAL............................................. $10,000
=======
</TABLE>
The selling stockholders will pay for the fees and expenses of their
counsel.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Delaware law, a corporation may include provisions in its certificate
of incorporation that will relieve its directors of monetary liability for
breaches of their fiduciary duty to the corporation, except under certain
circumstances, including a breach of the director's duty of loyalty, acts or
omissions of the director not in good faith or which involve intentional
misconduct or a knowing violation of law, the approval of an improper payment of
a dividend or an improper purchase by the corporation of stock or any
transaction from which the director derived an improper personal benefit. The
Registrant's Amended and Restated Certificate of Incorporation, as amended,
provides that the Registrant's directors are not liable to the Registrant or its
stockholders for monetary damages for breach of their fiduciary duty, subject to
the described exceptions specified by Delaware law.
Section 145 of the Delaware General Corporation Law grants to the
Registrant the power to indemnify each officer and director of the Registrant
against liabilities and expenses incurred by reason of the fact that he is or
was an officer or director of the Registrant if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Registrant and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Amended and Restated
By-laws of the Registrant provide for indemnification of each officer and
director of the Registrant to the fullest extent permitted by Delaware law.
David J. Butters and Robert B. Millard, employees of Lehman Brothers Inc.
("Lehman Brothers"), constitute two of the eight members of the Board of
Directors of the Registrant. Under the restated certificates of incorporation,
as amended to date, of Lehman Brothers and its parent, Lehman Brothers Holdings
Inc. ("Holdings"), both Delaware corporations, Messrs. Butters and Millard, in
their capacity as directors of the Registrant, are to be indemnified by Lehman
Brothers and Holdings to the fullest extent permitted by Delaware law. Messrs.
Butters and Millard are serving as directors of the Registrant at the request of
Lehman Brothers and Holdings.
Section 145 of the Delaware General Corporation Law also empowers the
Registrant to purchase and maintain insurance on behalf of any person who is or
was an officer or director of the Registrant against liability asserted against
or incurred by him in any such capacity, whether or not the Registrant would
have the power to indemnify such officer or director against such liability
under the provisions of Section 145. The Registrant has purchased and maintains
a directors' and officers' liability policy for such purposes. Messrs. Butters
and Millard are insured against certain liabilities which they may incur in
their capacity as directors pursuant to insurance maintained by Holdings.
II-1
<PAGE> 12
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
3.1 -- Amended and Restated Certificate of Incorporation of the
Registrant, as amended (incorporated by reference to
Exhibit No. 3.1 to Form 10-K (File 1-13086) filed March
30, 1999).
3.2 -- By-laws of the Registrant, as amended (incorporated by
reference to Exhibit No. 3.2 to Form 8-K (File 1-3086)
filed June 2, 1998).
4.1 -- See Exhibits numbered 3.1 and 3.2 for provisions of the
Amended and Restated Certificate of Incorporation and
By-laws of the Registrant defining the rights of the
holders of Common Stock.
4.2 -- Amended and Restated Credit Agreement dated as of May 27,
1998, among EVI, Inc., EVI Oil Tools Canada Ltd., Chase
Bank of Texas, National Association, as U.S.
Administrative Agent, The Bank of Nova Scotia, as
Documentation Agent and Canadian Agent, ABN AMRO Bank,
N.V., as Syndication Agent, and the other Lenders defined
therein, including the forms of Notes (incorporated by
reference to Exhibit No. 4.1 to Form 8-K (File 1-13086)
filed June 16, 1998).
4.3 -- Indenture dated March 15, 1994, among Energy Ventures,
Inc., as Issuer, the Subsidiary Guarantors party thereto,
as Guarantors, and Chemical Bank, as Trustee
(incorporated by reference to Form 8-K (File 1-13086)
filed April 5, 1994).
4.4 -- Specimen 10 1/4% Senior Note due 2004 of Energy Ventures,
Inc. (incorporated by reference to Form 8-K (File
1-13086) filed April 5, 1994).
4.5 -- First Supplemental Indenture by and among Energy
Ventures, Inc., Prideco and Chemical Bank, as trustee,
dated June 30, 1995 (incorporated by reference to Exhibit
No. 4.4 to Registration Statement on Form S-3 (Reg. No.
33-61933)).
4.6 -- Second Supplemental Indenture by and among Energy
Ventures, Inc., EVI Arrow, Inc., EVI Watson, Inc. and The
Chase Manhattan Bank, as trustee, dated effective as of
December 6, 1996 (incorporated by reference to Exhibit
4.6 to Form 10-K (File 1-13086) filed March 20, 1997).
4.7 -- Third Supplemental Indenture by and among EVI, Inc.,
Ercon, Inc. and The Chase Manhattan Bank, as trustee,
dated effective as of May 1, 1997 (incorporated by
reference to Exhibit 99.2 to Form 8-K (File 1-13086)
filed October 27, 1997).
4.8 -- Fourth Supplemental Indenture by and among EVI, Inc., XLS
Holding, Inc., XL Systems, Inc. and The Chase Manhattan
Bank, as trustee, dated effective as of August 25, 1997
(incorporated by reference to Exhibit 99.3 to Form 8-K
(File 1-13086) filed October 27, 1997).
4.9 -- Fifth Supplemental Indenture by and between EVI, Inc. and
The Chase Manhattan Bank dated as of December 12, 1997
(including the Form of Note and Form of Exchange Note)
(incorporated by reference to Exhibit 4.1 to Form 8-K
(File 1-13086) filed December 31, 1997).
4.10 -- Indenture dated as of October 15, 1997, between EVI, Inc.
and The Chase Manhattan Bank, as Trustee (incorporated by
reference to Exhibit No. 4.13 to Registration Statement
on Form S-3 (Reg. No. 333-45207)).
4.11 -- First Supplemental Indenture dated as of October 28,
1997, between EVI, Inc. and The Chase Manhattan Bank, as
Trustee (including Form of Debenture) (incorporated by
reference to Exhibit 4.2 to Form 8-K (File 1-13086) filed
November 5, 1997).
</TABLE>
II-2
<PAGE> 13
<TABLE>
<C> <S>
4.12 -- Registration Rights Agreement dated November 3, 1997, by
and among EVI, Inc., Morgan Stanley & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation,
Credit Suisse First Boston Corporation, Lehman Brothers
Inc., Prudential Securities Incorporated and Schroder &
Co. Inc. (incorporated by reference to Exhibit 4.3 to
Current Report on Form 8-K (File 1-13086) filed November
5, 1997).
4.13 -- Indenture dated May 17, 1996, between Weatherford
Enterra, Inc. and Bank of Montreal Trust Company, as
Trustee (incorporated by reference to Exhibit 4.1 to
Weatherford Enterra, Inc.'s Current Report on Form 8-K
(File No. 1-7867) dated May 28, 1996).
4.14 -- First Supplemental Indenture dated and effective as of
May 27, 1998, between EVI Weatherford, Inc., the
successor by merger to Weatherford Enterra, Inc., and
Bank of Montreal Trust Company, as Trustee (incorporated
by reference to Exhibit 4.1 to Weatherford Enterra,
Inc.'s Current Report on Form 8-K (File No. 1-7867) filed
June 2, 1996).
4.15 -- Form of Weatherford Enterra, Inc.'s 7 1/4% Notes due May
15, 2006 (incorporated by reference to Exhibit 4.2 to
Weatherford Enterra, Inc.'s Current Report on Form 8-K
(File No. 1-7867) dated May 28, 1996).
4.16 -- Participation Agreement dated December 8, 1998, by and
among Weatherford Enterra Compression Company, L.P., ABN
AMRO Bank N.V., as Administrative Agent, Arranger and
Syndication Agent, Chase Bank of Texas, National
Association, and the Lessors listed on Schedule I thereto
(incorporated by reference to Exhibit 4.16 to Amendment
No. 2 to Registration Statement on Form S-4 (Reg. No.
333-65663)).
4.17 -- Master Lease Intended as Security dated as of December 8,
1998, between Weatherford Enterra Compression Company,
L.P., as Lessee, and ABN AMRO Bank N.V., as
Administrative Agent for the Lessors (incorporated by
reference to Exhibit 4.17 to Amendment No. 2 to
Registration Statement on Form S-4 (Reg. No. 333-65663)).
4.18 -- Guaranty Agreement dated as of December 8, 1998, between
Weatherford International, Inc. and ABN AMRO Bank N.V.,
as Administrative Agent for the Lessors (incorporated by
reference to Exhibit 4.18 to Amendment No. 2 to
Registration Statement on Form S-4 (Reg. No. 333-65663)).
*4.19 -- Asset Purchase Agreement dated March 31, 1999, among
ECD/Northwest, Inc., Clearwater Holdings, Inc., the
shareholders of Clearwater Holdings, Inc. listed on the
signature pages thereto, Weatherford U.S., L.P. and
Weatherford International, Inc.
*4.20 -- Asset Purchase Agreement dated May 17, 1999, by and among
Texas Pipe Works, Inc., Mark Blanks, Jr., Grant Prideco,
Inc., and Weatherford International, Inc.
*4.21 -- Escrow Agreement dated May 5, 1999, by and among
Weatherford U.S., L.P., Weatherford International, Inc.,
ECD/Northwest, Inc., Clearwater Holdings, Inc., the
individual shareholders listed on the signature page
thereto and National City Bank of Pennsylvania.
*5.1 -- Opinion of Curtis W. Huff, Senior Vice President, General
Counsel and Secretary of the Registrant.
</TABLE>
II-3
<PAGE> 14
<TABLE>
<C> <S>
*23.1 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of Weatherford International, Inc.
*23.2 -- Consent of Ernst & Young LLP, with respect to the
financial statements of Dailey International Inc.
*23.3 -- Consent of Curtis W. Huff, Senior Vice President, General
Counsel and Secretary of the Registrant (included in
Exhibit 5.1).
*24.1 -- Powers of Attorney from certain members of the Board of
Directors of the Registrant (contained on page II-6).
</TABLE>
- ---------------
* Filed herewith.
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Registrant has not
filed with this Registration Statement certain instruments defining the rights
of holders of long-term debt of the Registrant and its subsidiaries because the
total amount of securities authorized under any of such instruments does not
exceed 10% of the total assets of the Registrant and its subsidiaries on a
consolidated basis. The Registrant agrees to furnish a copy of any such
agreement to the Commission upon request.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
Provided, however, that paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
II-4
<PAGE> 15
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Securities Act or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of Houston, State of Texas, on June 7, 1999.
WEATHERFORD INTERNATIONAL, INC.
By: /s/ BERNARD J. DUROC-DANNER
----------------------------------
Bernard J. Duroc-Danner
President, Chief Executive
Officer,
Chairman of the Board and Director
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Bernard J. Duroc-Danner and Bruce F.
Longaker, Jr., or any of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same and all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting said
attorney-in-fact and agent, and any of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or any of them, or his or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ BERNARD J. DUROC-DANNER President, Chief Executive June 7, 1999
- ----------------------------------------------------- Officer, Chairman of the Board
Bernard J. Duroc-Danner and Director (Principal
Executive Officer)
/s/ BRUCE F. LONGAKER, JR. Senior Vice President and Chief June 7, 1999
- ----------------------------------------------------- Financial Officer (Principal
Bruce F. Longaker, Jr. Financial Officer)
/s/ FRANCES R. POWELL Vice President, Accounting and June 7, 1999
- ----------------------------------------------------- Controller (Principal
Frances R. Powell Accounting Officer)
Director June , 1999
- -----------------------------------------------------
David J. Butters
</TABLE>
II-6
<PAGE> 17
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ PHILIP BURGUIERES Director June 7, 1999
- -----------------------------------------------------
Philip Burguieres
/s/ SHELDON B. LUBAR Director June 7, 1999
- -----------------------------------------------------
Sheldon B. Lubar
Director June , 1999
- -----------------------------------------------------
William E. Macaulay
/s/ ROBERT B. MILLARD Director June 7, 1999
- -----------------------------------------------------
Robert B. Millard
/s/ ROBERT K. MOSES, JR. Director June 7, 1999
- -----------------------------------------------------
Robert K. Moses, Jr.
/s/ ROBERT A. RAYNE Director June 7, 1999
- -----------------------------------------------------
Robert A. Rayne
</TABLE>
II-7
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<C> <S>
3.1 -- Amended and Restated Certificate of Incorporation of the
Registrant, as amended (incorporated by reference to
Exhibit No. 3.1 to Form 10-K (File 1-13086) filed March
30, 1999).
3.2 -- By-laws of the Registrant, as amended (incorporated by
reference to Exhibit No. 3.2 to Form 8-K (File 1-3086)
filed June 2, 1998).
4.1 -- See Exhibits numbered 3.1 and 3.2 for provisions of the
Amended and Restated Certificate of Incorporation and
By-laws of the Registrant defining the rights of the
holders of Common Stock.
4.2 -- Amended and Restated Credit Agreement dated as of May 27,
1998, among EVI, Inc., EVI Oil Tools Canada Ltd., Chase
Bank of Texas, National Association, as U.S.
Administrative Agent, The Bank of Nova Scotia, as
Documentation Agent and Canadian Agent, ABN AMRO Bank,
N.V., as Syndication Agent, and the other Lenders defined
therein, including the forms of Notes (incorporated by
reference to Exhibit No. 4.1 to Form 8-K (File 1-13086)
filed June 16, 1998).
4.3 -- Indenture dated March 15, 1994, among Energy Ventures,
Inc., as Issuer, the Subsidiary Guarantors party thereto,
as Guarantors, and Chemical Bank, as Trustee
(incorporated by reference to Form 8-K (File 1-13086)
filed April 5, 1994).
4.4 -- Specimen 10 1/4% Senior Note due 2004 of Energy Ventures,
Inc. (incorporated by reference to Form 8-K (File
1-13086) filed April 5, 1994).
4.5 -- First Supplemental Indenture by and among Energy
Ventures, Inc., Prideco and Chemical Bank, as trustee,
dated June 30, 1995 (incorporated by reference to Exhibit
No. 4.4 to Registration Statement on Form S-3 (Reg. No.
33-61933)).
4.6 -- Second Supplemental Indenture by and among Energy
Ventures, Inc., EVI Arrow, Inc., EVI Watson, Inc. and The
Chase Manhattan Bank, as trustee, dated effective as of
December 6, 1996 (incorporated by reference to Exhibit
4.6 to Form 10-K (File 1-13086) filed March 20, 1997).
4.7 -- Third Supplemental Indenture by and among EVI, Inc.,
Ercon, Inc. and The Chase Manhattan Bank, as trustee,
dated effective as of May 1, 1997 (incorporated by
reference to Exhibit 99.2 to Form 8-K (File 1-13086)
filed October 27, 1997).
4.8 -- Fourth Supplemental Indenture by and among EVI, Inc., XLS
Holding, Inc., XL Systems, Inc. and The Chase Manhattan
Bank, as trustee, dated effective as of August 25, 1997
(incorporated by reference to Exhibit 99.3 to Form 8-K
(File 1-13086) filed October 27, 1997).
4.9 -- Fifth Supplemental Indenture by and between EVI, Inc. and
The Chase Manhattan Bank dated as of December 12, 1997
(including the Form of Note and Form of Exchange Note)
(incorporated by reference to Exhibit 4.1 to Form 8-K
(File 1-13086) filed December 31, 1997).
4.10 -- Indenture dated as of October 15, 1997, between EVI, Inc.
and The Chase Manhattan Bank, as Trustee (incorporated by
reference to Exhibit No. 4.13 to Registration Statement
on Form S-3 (Reg. No. 333-45207)).
4.11 -- First Supplemental Indenture dated as of October 28,
1997, between EVI, Inc. and The Chase Manhattan Bank, as
Trustee (including Form of Debenture) (incorporated by
reference to Exhibit 4.2 to Form 8-K (File 1-13086) filed
November 5, 1997).
</TABLE>
<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<C> <S>
4.12 -- Registration Rights Agreement dated November 3, 1997, by
and among EVI, Inc., Morgan Stanley & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation,
Credit Suisse First Boston Corporation, Lehman Brothers
Inc., Prudential Securities Incorporated and Schroder &
Co. Inc. (incorporated by reference to Exhibit 4.3 to
Current Report on Form 8-K (File 1-13086) filed November
5, 1997).
4.13 -- Indenture dated May 17, 1996, between Weatherford
Enterra, Inc. and Bank of Montreal Trust Company, as
Trustee (incorporated by reference to Exhibit 4.1 to
Weatherford Enterra, Inc.'s Current Report on Form 8-K
(File No. 1-7867) dated May 28, 1996).
4.14 -- First Supplemental Indenture dated and effective as of
May 27, 1998, between EVI Weatherford, Inc., the
successor by merger to Weatherford Enterra, Inc., and
Bank of Montreal Trust Company, as Trustee (incorporated
by reference to Exhibit 4.1 to Weatherford Enterra,
Inc.'s Current Report on Form 8-K (File No. 1-7867) filed
June 2, 1996).
4.15 -- Form of Weatherford Enterra, Inc.'s 7 1/4% Notes due May
15, 2006 (incorporated by reference to Exhibit 4.2 to
Weatherford Enterra, Inc.'s Current Report on Form 8-K
(File No. 1-7867) dated May 28, 1996).
4.16 -- Participation Agreement dated December 8, 1998, by and
among Weatherford Enterra Compression Company, L.P., ABN
AMRO Bank N.V., as Administrative Agent, Arranger and
Syndication Agent, Chase Bank of Texas, National
Association, and the Lessors listed on Schedule I thereto
(incorporated by reference to Exhibit 4.16 to Amendment
No. 2 to Registration Statement on Form S-4 (Reg. No.
333-65663)).
4.17 -- Master Lease Intended as Security dated as of December 8,
1998, between Weatherford Enterra Compression Company,
L.P., as Lessee, and ABN AMRO Bank N.V., as
Administrative Agent for the Lessors (incorporated by
reference to Exhibit 4.17 to Amendment No. 2 to
Registration Statement on Form S-4 (Reg. No. 333-65663)).
4.18 -- Guaranty Agreement dated as of December 8, 1998, between
Weatherford International, Inc. and ABN AMRO Bank N.V.,
as Administrative Agent for the Lessors (incorporated by
reference to Exhibit 4.18 to Amendment No. 2 to
Registration Statement on Form S-4 (Reg. No. 333-65663)).
*4.19 -- Asset Purchase Agreement dated March 31, 1999, among
ECD/Northwest, Inc., Clearwater Holdings, Inc., the
shareholders of Clearwater Holdings, Inc. listed on the
signature pages thereto, Weatherford U.S., L.P. and
Weatherford International, Inc.
*4.20 -- Asset Purchase Agreement dated May 17, 1999, by and among
Texas Pipe Works, Inc., Mark Blanks, Jr., Grant Prideco,
Inc., and Weatherford International, Inc.
*4.21 -- Escrow Agreement dated May 5, 1999, by and among
Weatherford U.S., L.P., Weatherford International, Inc.,
ECD/Northwest, Inc., Clearwater Holdings, Inc., the
individual shareholders listed on the signature page
thereto and National City Bank of Pennsylvania.
*5.1 -- Opinion of Curtis W. Huff, Senior Vice President, General
Counsel and Secretary of the Registrant.
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<C> <S>
*23.1 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of Weatherford International, Inc.
*23.2 -- Consent of Ernst & Young LLP, with respect to the
financial statements of Dailey International Inc.
*23.3 -- Consent of Curtis W. Huff, Senior Vice President, General
Counsel and Secretary of the Registrant (included in
Exhibit 5.1).
*24.1 -- Powers of Attorney from certain members of the Board of
Directors of the Registrant (contained on page II-6).
</TABLE>
- ---------------
* Filed herewith.
<PAGE> 1
EXHIBIT 4.19
===============================================================================
ASSET PURCHASE AGREEMENT
BY AND AMONG
ECD/NORTHWEST, INC.,
CLEARWATER HOLDINGS, INC.,
THE SHAREHOLDERS OF CLEARWATER HOLDINGS, INC.,
WEATHERFORD U.S., L.P.
AND
WEATHERFORD INTERNATIONAL, INC.
MARCH 30, 1999
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
<S> <C>
PURCHASE AND SALE OF ASSETS...................................................1
1.1 Transferred Assets...............................................1
1.2 Excluded Assets..................................................2
1.3 Closing..........................................................2
1.4 Purchase Price for the Assets....................................2
1.5 Cash Payment Adjustment..........................................3
1.6 Weatherford Share Adjustments....................................4
1.7 Contingent Payment...............................................4
1.8 Liabilities Not Assumed by the Buyer.............................6
1.9 Transfer Taxes; Recording Fees...................................6
1.10 Allocation of Purchase Price.....................................6
1.11 Prorations of Property Taxes and Certain Expenses................7
1.12 Adjustments for Changes in Capitalization........................7
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLER AND THE SHAREHOLDERS.......................................7
2.1 Corporate and Shareholder Matters................................8
2.2 Validity of Agreement and Conflict with Other Instruments........8
2.3 Approvals, Licenses and Authorizations...........................8
2.4 Title to and Condition of Properties.............................9
2.5 Contracts and Commitments.......................................10
2.6 Financial Statements............................................10
2.7 No Adverse Change...............................................11
2.8 Taxes...........................................................11
2.9 Environmental Matters...........................................11
2.10 No Litigation...................................................12
2.11 Warranties and Product Liability................................12
2.12 Employee Matters................................................13
2.13 Finder's Fees...................................................13
2.14 Insurance.......................................................13
2.15 Securities Law Matters..........................................13
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND WEATHERFORD..................15
3.1 Corporate Matters...............................................15
3.2 Approvals, Licenses and Authorizations..........................15
3.3 Finder's Fees...................................................15
3.4 Authorization for the Weatherford Shares........................16
3.5 SEC Documents...................................................16
ARTICLE 4
REGISTRATION RIGHTS..........................................................16
4.1 Registration Rights.............................................16
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
4.2 Procedure.......................................................17
4.3 Indemnification.................................................18
4.4 Termination.....................................................19
4.5 Put Option......................................................19
ARTICLE 5
ADDITIONAL AGREEMENTS........................................................19
5.1 Access to Information...........................................19
5.2 Conduct of the Business.........................................20
5.3 Negotiation with Others.........................................21
5.4 Information.....................................................21
5.5 Delivery of Business Documents..................................21
5.6 Further Assurances..............................................21
5.7 Nondisclosure of Proprietary Information........................22
5.8 Covenant Not to Compete With the Business.......................22
5.9 Use of Names....................................................23
5.10 Employee Matters................................................23
5.11 HSR Filing......................................................23
5.12 Continuation of Business by the Buyer...........................24
5.13 Saipem Contract.................................................24
ARTICLE 6
BUYER'S AND WEATHERFORD'S CONDITIONS.........................................25
6.1 Representations, Warranties and Covenants.......................25
6.2 Good Standing...................................................25
6.3 Instruments of Transfer.........................................25
6.4 No Litigation...................................................25
6.5 Other Legal Matters.............................................25
6.6 Licenses, Consents and Approvals by the Seller..................26
6.7 Consents of Third Persons.......................................26
6.8 Consents and Release of Liens...................................26
6.9 No Material Adverse Event.......................................26
6.10 Resolutions.....................................................26
6.11 Employment Agreement............................................26
6.12 Supply Agreement................................................26
6.13 License Agreement...............................................26
6.14 Representation Agreement........................................26
6.15 Repayment of Indebtedness.......................................26
6.16 Stock Exchange Approval.........................................27
6.17 Approvals for Issuance of Weatherford Shares....................27
6.18 Assumed Trade Payables..........................................27
ARTICLE 7
SELLER'S AND SHAREHOLDERS' CONDITIONS........................................27
7.1 Representations and Warranties..................................27
7.2 No Litigation...................................................27
7.3 Licenses, Consents and Approvals................................27
7.4 Resolutions.....................................................27
7.5 Other Legal Matters.............................................28
7.6 Representation Agreement........................................28
7.7 Employment Agreement............................................28
</TABLE>
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<TABLE>
<S> <C>
7.8 Supply Agreement................................................28
ARTICLE 8
INDEMNIFICATION..............................................................28
8.1 Indemnification by the Seller and the Shareholders..............28
8.2 Indemnification by the Buyer and Weatherford....................28
8.3 Procedure.......................................................29
8.4 Payment.........................................................29
8.5 Failure to Pay Indemnification..................................29
8.6 Right of Offset.................................................29
8.7 Adjustment of Liability.........................................30
8.8 Express Negligence..............................................30
8.9 Indemnification Limitations.....................................30
ARTICLE 9
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS..........................31
ARTICLE 10
TERMINATION..................................................................31
10.1 Termination.....................................................31
10.2 Liability Upon Termination......................................32
10.3 Notice of Termination...........................................32
ARTICLE 11
DEFINITIONS OF CERTAIN TERMS.................................................32
ARTICLE 12
MISCELLANEOUS................................................................39
12.1 Representative..................................................39
12.2 Expenses........................................................39
12.3 Notices.........................................................39
12.4 Arbitration.....................................................40
12.5 Successors......................................................41
12.6 Entire Agreement................................................41
12.7 Governing Law...................................................41
12.8 Waiver..........................................................41
12.9 Severability....................................................41
12.10 No Third Party Beneficiaries....................................41
12.11 Counterparts....................................................42
12.12 Headings........................................................42
12.13 Negotiated Transaction..........................................42
</TABLE>
LIST OF DISCLOSURE SCHEDULES
Section 1.1(a)(i) - Equipment
Section 1.1(a)(ii) - Inventories
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Section 1.1(a)(iii) - Accounts Receivable
Section 1.1(a)(iv) - Proprietary Information
Section 1.1(a)(v) - Real Property
Section 1.1(a)(vi) - Entitlements
Section 1.2 - Excluded Assets
Section 1.4(c) - Trade Payables
Section 1.4(d) - Assumed Liabilities
Section 1.10 - Purchase Price Allocations
Section 2.1 - Corporate and Shareholder Matters
Section 2.2(b) - Conflict with Other Instruments
Section 2.4(b) - Inventory Location
Section 2.5 - Contracts and Commitments
Section 2.6 - Financial Statements
Section 2.9(a) - Environmental Matters
Section 2.11 - Product Warranties
Section 2.13 - Finder's Fees
Section 2.14 - Insurance
Section 11.61 - Permitted Liens
Section 11.85 - Services
LIST OF EXHIBITS
Exhibit A-1-Form of Todd Thomas Employment Agreement
Exhibit A-2-Form of Ted Wilkes Employment Agreement
Exhibit B-Form of Supply Agreement
Exhibit C-Form of License Agreement
Exhibit D-Form of Agency Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into this 30th day of March, 1999, by and among ECD/Northwest, Inc., a Delaware
corporation (the "Seller"), Clearwater Holdings, Inc., a Delaware corporation
and the sole shareholder of the Seller ("CHI"), the shareholders of CHI listed
on the signature pages hereto ( the "CHI Shareholders", and together with CHI,
the "Shareholders"), Weatherford U.S., L.P., a Louisiana limited partnership
(the "Buyer"), and Weatherford International, Inc., a Delaware corporation
("Weatherford").
WITNESSETH:
WHEREAS, the Seller desires to transfer to the Buyer the Business and
certain properties, assets and certain of the liabilities related to the
Business, and the Buyer desires to acquire such Business, properties and assets
and assume such liabilities, all upon the terms and subject to the conditions
set forth herein; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and agreements, all as more fully set forth below.
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Transferred Assets.
(a) Subject to the terms and conditions of this Agreement
and in consideration of the obligations of the Buyer as provided herein, and
except as otherwise provided in Section 1.2 hereof, at the Closing, the Seller
shall sell, assign, transfer, grant, bargain, deliver and convey, and CHI shall
cause to be sold, assigned, transferred, granted, bargained, delivered and
conveyed, to the Buyer, free and clear of all Liens, except Permitted Liens,
the Seller's and the Affiliated Company's entire right, title and interest in,
to and under the Business, as a going concern, and all assets owned or used by
the Seller or the Affiliated Company (other than Excluded Assets) in connection
with, relating to or arising out of the Business of every type and description,
tangible and intangible, wherever located and whether or not reflected on the
books and records of the Seller (all of such assets, properties, rights and
business collectively referred to as the "Transferred Assets"), including, but
not limited to:
(i) all Equipment, including the Equipment set
forth in Section 1.1(a)(i) of the Disclosure Schedule;
(ii) all Inventories, including the Inventories set
forth in Section 1.1(a)(ii) of the Disclosure Schedule;
(iii) all Accounts Receivable, including the
Accounts Receivable set forth in Section 1.1(a)(iii) of the
Disclosure Schedule;
(iv) all Proprietary Information, including the
Proprietary Information set forth in Section 1.1(a)(iv) of
the Disclosure Schedule;
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(v) all Real Property, including the Real Property
set forth in Section 1.1(a)(v) of the Disclosure Schedule;
(vi) subject to Section 1.1(b) hereof, the benefit
of all unfilled or outstanding purchase orders, sales or
service contracts, other commitments, contracts, engagements
and leases to which the Seller is entitled at the Closing and
which relate to the Business (the "Entitlements"), all of
which Entitlements are set forth in Section 1.1(a)(vi) of the
Disclosure Schedule;
(vii) all of the Seller's and its Affiliates' rights
to and interest in the Saipem Contract and the Project;
(viii) all prepaid expenses and deposits made by the
Seller and its Affiliates relating to the Business; and
(ix) any goodwill associated with the Business.
(b) The Seller and each of the Shareholders shall use
their best efforts to obtain such consents of third parties as are necessary
for the assignment of the Transferred Assets. To the extent that any of the
Transferred Assets are not assignable by the terms thereof or consents to the
assignment thereof cannot be obtained as provided herein, the Transferred
Assets shall be held by the Seller in trust for the Buyer and shall be
performed by the Buyer in the name of the Seller and all benefits and
obligations derived thereunder shall be for the account of the Buyer; provided,
however, that where entitlement of the Buyer to such Transferred Assets
hereunder is not recognized by any third party, the Seller and the Shareholders
shall, at the request of the Buyer, enforce in a reasonable manner, at the cost
of and for the account of the Buyer, any and all rights of the Seller against
such third party.
(c) Within three days of the Closing Date, the Seller and the
Shareholders shall notify each Person which may have possession of any of the
Transferred Assets at the Closing Date, whether by consignment or otherwise, of
the transfer of such Transferred Assets to the Buyer.
1.2 Excluded Assets. Anything in Section 1.1(a) to the contrary
notwithstanding, there shall be excluded from the assets, properties, rights
and business to be transferred to the Buyer hereunder those assets of the
Seller listed or described in Section 1.2 of the Disclosure Schedule
(collectively, the "Excluded Assets").
1.3 Closing. Subject to the conditions set forth in this
Agreement, the closing shall take place at such time, date and place as the
parties hereto shall mutually agree upon in writing (the "Closing Date").
Failure to consummate the transactions contemplated hereby on such date shall
not result in a termination of this Agreement or relieve any party hereto of
any obligation hereunder. Title to, ownership of, control over and risk of loss
of the Transferred Assets shall pass to the Buyer at the Closing.
1.4 Purchase Price for the Assets. In consideration of the
transfer to the Buyer of the Transferred Assets, the Buyer shall, on the
Closing Date, (a) pay to the Seller an aggregate amount equal to $12,000,000 in
immediately available funds by wire transfer to a bank account or accounts to
be designated by the Seller (the "Cash Payment"), (b) cause Weatherford to
issue to the Seller the Weatherford Shares, (c) assume the obligations of the
Seller to pay the Trade Payables of the Business incurred in the ordinary
course of the Business (the "Assumed Trade Payables"), and (d) assume the
obligations of the Seller under the express written terms of the Entitlements
to the extent and only to the extent such obligations are not Pre-Closing
Obligations (collectively, the "Assumed Liabilities"), all of which Assumed
Liabilities are listed in Section 1.4(d) of the Disclosure Schedule, which
shall be updated and delivered by the Seller to the Buyer as of and on the
Closing Date. The Cash Payment, as adjusted by Section 1.5, the Weatherford
Shares, the
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Assumed Trade Payables and the Assumed Liabilities are herein collectively
referred to as the "Purchase Price".
1.5 Cash Payment Adjustment.
(a) The Buyer shall within 60 calendar days after the
Closing Date prepare or cause to be prepared a statement reflecting the Closing
Date Working Capital and the calculation thereof (the "Closing Statement") and
shall deliver such Closing Statement to the Representative. The Buyer shall
provide the Representative with access to copies of all work papers and other
relevant documents to verify the information contained in the Closing
Statement. The Representative shall have a period of 30 calendar days after
delivery to him of the Closing Statement to review it and make any objections
in writing to the Buyer. If written objections to the Closing Statement are
delivered to the Buyer within such 30-day period, then the Buyer and the
Representative shall attempt to resolve the matter or matters in dispute. If no
written objections are made within the time period provided above, the Closing
Statement shall become final and binding on the parties hereto and the Cash
Payment shall be adjusted as described in clause (c) below.
(b) If disputes with respect to the Closing Statement
cannot be resolved by the Buyer and the Representative within 15 calendar days
after the delivery of the objections to the Closing Statement, then either
party with notice to the other party may submit the specific matters in dispute
to Price Waterhouse Coopers LLP or such other recognized independent accounting
firm as may be approved by the Buyer and the Representative, which firm shall
render its opinion as to such matters. Based on such opinion, such accounting
firm will then send to the Buyer and the Representative its determination in
writing on the specific matters in dispute, including any resulting revisions
to the Closing Statement, which determination shall be final and binding on the
parties hereto. The Closing Statement, including revisions, if any, made by
such accounting firm, shall then become final and binding on the parties hereto
and the Cash Payment shall be adjusted as described in clause (c) below. The
fees and other costs charged by the independent accounting firm shall be borne
by the Buyer and the Seller equally.
(c) At the time the Closing Statement becomes final and
binding on the parties hereto, the Cash Payment will be:
(i) reduced by the amount, if any, by which the
Target Working Capital exceeds the Closing Date Working Capital; and
(ii) increased by the amount, if any, by which the
Closing Date Working Capital exceeds the Target Working Capital.
If the Cash Payment, as adjusted, is less than $12,000,000, the Seller shall,
within five days of the date that the Closing Statement becomes final and
binding on the parties hereto, pay to the Buyer the amount of such difference.
If the Cash Payment, as adjusted, is more than $12,000,000, the Buyer shall,
within five days of the date that the Closing Statement becomes final and
binding on the parties hereto, pay to the Seller the amount of such difference.
(d) All payments made pursuant to this Section 1.5
shall be paid in immediately available funds by wire transfer to a bank account
or accounts to be designated by the party to receive the payments. All payments
made pursuant to this Section 1.5 shall be deemed to be adjustments to the
Purchase Price.
(e) For purposes of preparing the Closing Statement, (i)
there shall be no increases in the carrying value of any assets of the Business
by virtue of any adjustments made after December 31, 1998, and (ii) there shall
be no increases in the assets of the Business due to any increase in assets as
a result of unrealized gains, translation adjustments, reversals of accruals
for contingent liabilities, except to the extent such accruals related to
specific liabilities that were paid, changes of accounting principles or
methods,
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adjustments to the carrying value of inventory due to standard cost or other
similar adjustments or other similar increases in the carrying value of assets
due to non-cash items.
1.6 Weatherford Share Adjustments. If (a) any of the Seller Group
sells any Weatherford Shares on or before the first anniversary of the Closing
Date in a bona fide open market transaction to a non-Affiliate of any of the
Seller, the Seller Group or the Shareholders (a "Resale") at a gross sales
price per share that is less than an amount equal to $9,900,000 divided by the
number of Weatherford Shares issued to the Seller at Closing (the "First Share
Floor Price"), Weatherford and the Buyer agree to pay such selling member of
the Selling Group an amount equal to the number of Weatherford Shares sold in
the Resale multiplied by the difference between the First Share Floor Price and
the gross sales price per share received in the Resale, or (b) any of the
Seller Group sells any Weatherford Shares after the first anniversary and on or
before the second anniversary of the Closing Date in a Resale at a gross sales
price per share that is less than an amount equal to $10,450,000 divided by the
number of Weatherford Shares issued to the Seller at Closing (the "Second Share
Floor Price"), Weatherford and the Buyer agree to pay such selling member of
the Selling Group an amount equal to the number of Weatherford Shares sold in
the Resale multiplied by the difference between the Second Share Floor Price
and the gross sales price per share received in the Resale (each payment
referred to in clauses (a) and (b) above is referred to herein as an
"Additional Payment"). On the third Business Day following the receipt by
Weatherford of adequate documentation of a Resale, including a copy of the
broker's transaction report for the Resale which shall include the gross sales
price per Weatherford Share sold in the Resale, an Additional Payment shall be
paid by the Buyer or Weatherford to the appropriate selling member of the
Seller Group by wire transfer of same day funds (as designated by such Person).
Notwithstanding the foregoing, if for any period of 20 consecutive trading days
subsequent to the date the Registration Statement is declared effective by the
Commission (excluding trading days occurring during any period of deferral or
suspension pursuant to Section 4.1), the closing sales price of the Common
Stock, as reported by the New York Stock Exchange, is greater than the Target
Price, Weatherford and the Buyer shall be obligated to make Additional Payments
only with respect to a maximum aggregate of 137,500 of the Weatherford Shares,
including all Weatherford Shares previously sold by any member of the Seller
Group.
1.7 Contingent Payment.
(a) If the VTC is less than the Final Value, the Buyer
and Weatherford shall pay to the Seller an amount equal to the Final Value
minus the VTC (the "Contingent Payment"); provided, however, that if any of the
Weatherford Shares are sold, transferred or disposed of by any member of the
Seller Group prior to the Contingent Payment Date, the Contingent Payment shall
be reduced by a percentage equal to the percentage which the number of
Weatherford Shares sold, transferred or otherwise disposed of by the Seller
Group represents to the total number of Weatherford Shares issued to the Seller
at Closing; provided further, however, if after the date the Registration
Statement is declared effective by the Commission and prior to the Contingent
Payment Date, the closing sales price of the Common Stock, as reported by the
New York Stock Exchange, is greater than the Target Price for any period of 20
consecutive trading days (excluding trading days occurring during any period of
deferral or suspension pursuant to Section 4.1), Weatherford and the Buyer
shall not be obligated to make the Contingent Payment. The Contingent Payment
may be made in cash or in shares of Common Stock, in the sole discretion of the
Buyer and Weatherford. If the Contingent Payment is made in shares of Common
Stock, (i) the number of shares to be issued shall be an amount equal to the
Contingent Payment divided by the average of the closing sales price per share
of the Common Stock for the five consecutive trading days immediately preceding
the Contingent Payment Date, as reported by the New York Stock Exchange and
(ii) Weatherford and the Seller shall enter into a registration rights
agreement on terms substantially similar to those set forth in Article 4.
(b) The value allocated to the Business at the end of the
Performance Period (the "Final Value") shall be determined as follows:
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(i) If Adjusted Gross Margin Per Commissioned
Compressor during the Performance Period is less than 100% of
the Projected Performance, the Final Value shall be
$22,450,000;
(ii) If Adjusted Gross Margin Per Commissioned
Compressor during the Performance Period is equal to or
greater than 100% but less than 120% of the Projected
Performance, the Final Value shall be $25,000,000; and
(iii) If Adjusted Gross Margin Per Commissioned
Compressor during the Performance Period is equal to or
greater than 120% of the Projected Performance, the Final
Value shall be $27,000,000.
(c) The projected Adjusted Gross Margin Per Commissioned
Compressor during the Performance Period (the "Projected Performance") shall be
determined as follows:
(i) If Capital Expenditures during the Performance
Period are less than or equal to $4,900,000, the Projected
Performance shall be equal to $352,000;
(ii) If Capital Expenditures during the Performance
Period are greater than $4,900,000 but less than or equal to
$6,500,000, the Projected Performance shall be equal to
$356,000; and
(iii) If Capital Expenditures during the Performance
Period are greater than $6,500,000, the Projected Performance
shall be equal to (A) $356,000 less (B) $1,780 for every
$100,000 of Capital Expenditures in excess of $6,500,000.
For purposes of determining the Final Value and the Projected Performance,
"Adjusted Gross Margin Per Commissioned Compressor" shall mean an amount equal
to (i) Net Revenues from the provision of the Services utilizing the technology
acquired from the Seller hereunder less cost of goods sold or services provided
before depreciation, interest and amortization, divided by (ii) the Average
Number of Commissioned Compressors during the Performance Period. "Capital
Expenditures" shall mean the manufacturing costs or purchase price of the
commissioned compressors used by the Buyer in its underbalanced drilling
compressor services during the Performance Period. Adjusted Gross Margin Per
Commissioned Compressor and Capital Expenditures shall be calculated in
accordance with the historical accounting practices of the Seller applied on a
consistent basis. "Average Number of Commissioned Compressors" shall mean an
amount, based upon the total number of compressors Available For Use by the
Buyer in rendering the Services at any time during the Performance Period,
resulting from (i) the sum of the total number of months that each compressor
was used or Available For Use by the Buyer in rendering the Services during the
Performance Period, divided by (ii) 24. If the Services, including charges for
chemicals, are provided to a customer as part of an overall package, only that
portion of the revenues attributable to the Services, including the chemicals,
shall be included in revenues.
(d) Within 60 calendar days following the Contingent
Payment Date, the Buyer shall prepare and deliver to the Representative a
statement reflecting the Final Value and Adjusted Gross Margin Per Commissioned
Compressor and Capital Expenditures during the Performance Period, and the
calculations thereof (the "Contingent Payment Statement"). The Buyer shall
provide the Representative with access to copies of all work papers and other
relevant documents to verify the information contained in the Contingent
Payment Statement. The Representative shall have a period of 30 calendar days
after delivery to him of the Contingent Payment Statement to review it and make
any objections the Representative may have in writing to the Buyer. If written
objections to the Contingent Payment Statement are received by the Buyer within
such 30-day period, then the Buyer and the Representative shall attempt to
resolve the matter or matters in dispute. If no written objections are made
within the time period provided above, the Buyer shall pay to the
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<PAGE> 11
Seller the Contingent Payment, if any, within five calendar days after the end
of such 30-day period. If disputes with respect to the Final Statement cannot
be resolved by the Buyer and the Representative within 15 calendar days after
the receipt by the Buyer of the objections to the Contingent Payment Statement,
then either party with notice to the other party may submit the specific
matters in dispute to Price Waterhouse Coopers LLP, or such other recognized
independent accounting firm as may be approved by the Buyer and the
Representative, which firm shall render its opinion as to such matters. Based
on such opinion, such accounting firm will then send to the Buyer and the
Representative its determination on the specific matters in dispute, together
with a revised Contingent Payment Statement reflecting such resolution, which
determination shall be final and binding on the parties hereto. Within five
calendar days after delivery of such opinion to the Buyer and the
Representative, the Buyer shall pay to the Seller the Contingent Payment, if
any. The fees and other costs charged by the independent accounting firm shall
be borne equally by the Buyer and the Seller. All payments made pursuant to
this Section 1.7 shall be paid in immediately available funds by wire transfer
to a bank account or accounts to be designated by the Representative.
1.8 Liabilities Not Assumed by the Buyer. Except for the Assumed
Liabilities, the Seller and the Shareholders shall pay and discharge in due
course all liabilities, debts and obligations relating to the Seller, the
Shareholders, the Transferred Assets or the Business, whether known or unknown,
now existing or hereafter arising, contingent or liquidated, including, without
limitation, (i) any Tax liabilities pertaining to any of the Seller, the
Shareholders, the Transferred Assets or the Business for periods prior to and
including the Closing Date, (ii) any Debt Obligations of any Person, (iii) all
liabilities and obligations relating to any products manufactured, sold or
distributed or services provided by or on behalf of the Seller or with respect
to any claims made pursuant to warranties to third Persons in connection with
products manufactured, sold or distributed or services provided by or on behalf
of the Seller, the Shareholders or any Affiliate of the Seller or the
Shareholders, (iv) all Pre-Closing Obligations, (v) all liabilities and
obligations of any Person arising prior to the Closing or related to the
conduct or operation of the Transferred Assets or the Business on or prior to
the Closing Date and (vi) all obligations, liabilities and expenses of the
Seller, the Shareholders or any Affiliate of the Seller or the Shareholders,
including investment banking, legal and accounting fees and expenses, relating
to the transactions contemplated herein (collectively, the "Retained
Liabilities"), and the Buyer shall not assume, or in any way be liable or
responsible for, any of such Retained Liabilities.
1.9 Transfer Taxes; Recording Fees. The Buyer and the Seller
acknowledge and agree that any and all sales, use, value added, stamp, transfer
or other similar Taxes imposed as a result of the consummation of the
transactions contemplated by this Agreement shall be borne equally by the
Buyer, on the one hand, and the Seller and the Shareholders, on the other hand,
including, without limitation, any liability to which any of the parties may
become subject as a result of the fact that the transactions contemplated by
this Agreement are effected without compliance with the bulk sales provisions
of the Uniform Commercial Code as in effect in any state or any similar statute
as enacted in any jurisdiction. The Buyer shall pay any and all recording,
filing or other fees relating to the conveyance or transfer of the Transferred
Assets from the Seller to the Buyer. The Buyer shall deliver to the Seller on
the Closing Date a certificate certifying that the Inventories are being
purchased for resale to the extent stated therein.
1.10 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Transferred Assets by the Buyer and the Representative
within 60 days following the Closing Date subject to the following: (i) such
allocation will be in accordance with the allocations set forth in Section 1.10
of the Disclosure Schedule; (ii) such allocation of the Purchase Price will be
reflected in Form 8594 that will be filed by the Buyer and the Seller in
accordance with Section 1060 of the Code, with such adjustments as may be
necessary pursuant to Section 1.5; and (iii) the Buyer and the Seller agree to
treat and report in filings under the Code (and, if necessary, to cause each of
their respective Affiliates to so treat and report) the transactions
contemplated by this Agreement in a manner consistent with one another.
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1.11 Prorations of Property Taxes and Certain Expenses.
(a) The Seller and each of the Shareholders warrant
that the Transferred Assets are not, and on the Closing Date will not be,
subject to or liable for any special assessments or similar types of
impositions. Any general property Tax assessed against or pertaining to the
Transferred Assets for the taxable period that includes the Closing Date shall
be prorated between the Buyer and the Seller as of the Closing Date. In the
event the amount of any such general property Tax cannot be ascertained as of
the Closing Date, proration shall be made on the basis of the preceding year,
the Buyer shall receive a credit against the Cash Payment for the Seller's pro
rata portion of such general property Taxes, and to the extent that such
proration may be inaccurate, the Seller and the Buyer agree to make such
payment to the other after the tax statements have been received as is
necessary to allocate such general property Tax properly between the Seller and
the Buyer as of the Closing Date.
(b) Except as otherwise provided in this Agreement, the
Seller and the Buyer agree that amounts payable with respect to utility charges
and other items of expense attributable to the conduct of the Business shall be
prorated as of the Closing Date to the extent the charges and expenses cannot
be identified as to the party that received the benefits to which such charges
and expenses relate. The Buyer shall receive a credit against the Cash Payment
for the Seller's pro rata portion of such charges and expenses. To the extent
such amounts are estimated on the Closing Date and such prorations are
inaccurate, the Seller and the Buyer agree to make such payment to the other
after such amounts are correctly computed as is necessary to allocate such
charges properly between the Seller and the Buyer as of the Closing Date.
(c) The Seller shall receive a credit, to be paid at
Closing, for the amount of prepaid expenses and deposits relating to the
Entitlements, to the extent and only to the extent that such prepaid expenses
and deposits are Transferred Assets and are not reflected on the Financial
Statements.
1.12 Adjustments for Changes in Capitalization. For purposes of this
Article 1, references to the Common Stock and Weatherford Shares shall include
any stock, securities, cash or other property that may be received by a
stockholder who held a share of Common Stock on the Closing Date in respect of
such share and all references to the market value of the Common Stock as of any
date shall mean the sum of the market value of Common Stock and such other
stock, securities, cash or other property that may be received by a holder of
Common Stock in respect of a share of Common Stock as of the date of the
Closing. The determination of the value of any security shall be based on the
closing sale price of that security on the principal stock exchange on which it
is listed if that security is traded on a national securities exchange. If the
principal market in which a security is traded is an automated trading system,
such as NASDAQ, the market value on any day shall be the average of the high
and low bid price for that security on that day. If any other security or
property is received, its value shall be determined by agreement by a
nationally recognized investment banking firm selected in good faith by
Weatherford. In the event of a reclassification of the Common Stock into a
greater or lesser number of shares of Common Stock, all references to numbers
of shares of Common Stock and all market prices for the Common Stock shall be
appropriately adjusted to reflect such reclassification.
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLER AND THE SHAREHOLDERS
The Seller and each of the Shareholders hereby jointly and severally
represent and warrant to the Buyer and Weatherford and covenant and agree as
follows:
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2.1 Corporate and Shareholder Matters. Each of the Seller and CHI
is a corporation duly incorporated, validly existing and in good standing under
the laws of Delaware. Each of the Seller and CHI is duly authorized, qualified
and licensed and has all requisite power and authority under all applicable
laws, ordinances and orders of public authorities to own, operate and lease its
properties and assets and to carry on its business in the places and in the
manner currently conducted. The Seller is qualified to transact business as a
foreign corporation and is in good standing in the jurisdictions, if any,
specified in Section 2.1 of the Disclosure Schedule, and there is no other
jurisdiction in which the nature and extent of the Business or the character of
the Seller's assets makes such qualification necessary. Each of the Seller and
CHI has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations under this Agreement. Each of the CHI
Shareholders has all requisite legal capacity, power and authority to enter
into this Agreement and to perform his obligations under this Agreement. Other
than Permitted Liens, CHI owns beneficially and of record all of the issued and
outstanding stock of the Seller free and clear of all Liens. Other than
Permitted Liens, the CHI Shareholders collectively own beneficially and of
record all of the issued and outstanding stock of CHI free and clear of all
Liens.
2.2 Validity of Agreement and Conflict with Other Instruments.
(a) This Agreement, and all transactions contemplated
hereby, have been duly authorized and approved by the boards of directors and
the shareholders of each of the Seller and CHI. No further corporate action is
necessary on the part of either the Seller or CHI to execute and deliver this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Seller and each of the Shareholders
and is a legal, valid and binding obligation of the Seller and each of the
Shareholders enforceable against them in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect that
affect creditors' rights generally and by legal and equitable limitations on
the availability of specific remedies.
(b) The execution, delivery and performance of this
Agreement and the other agreements and documents to be delivered by the Seller
and each of the Shareholders to the Buyer, the consummation of the transactions
contemplated hereby or thereby, and the compliance with the provisions hereof
or thereof, by the Seller and each of the Shareholders will not, with or
without the passage of time or the giving of notice or both: (i) conflict with,
constitute a breach, violation or termination of any provision of, or, subject
to the receipt of all required third-party consents set forth in Section 2.2(b)
of the Disclosure Schedule (the "Required Consents"), give rise to any right of
termination, cancellation or acceleration, or loss of any right or benefit or
both, under, any of the Entitlements to which the Seller is a party or by which
it is bound; (ii) conflict with or violate the certificate of incorporation or
by-laws of either the Seller or CHI; (iii) result in the creation or imposition
of any Lien on any of the Transferred Assets; (iv) except as set forth in
Section 2.2(b) of the Disclosure Schedule, result in an acceleration or
increase of any amounts due with respect to any of the Assumed Liabilities or
the Trade Payables; (v) violate any law, statute, ordinance, regulation,
judgment, writ, injunction, rule, decree, order or any other restriction of any
kind or character applicable to the Seller or any of the Shareholders or any of
their respective properties or assets; or (vi) conflict with, constitute a
breach, violation or termination of any agreement or understanding, whether
written or otherwise, to which the Seller or any of the Shareholders is a party
or by which it or he is bound.
2.3 Approvals, Licenses and Authorizations.
(a) Except for the filing of a pre-merger notification
and report form under the HSR Act and the receipt of all Required Consents, no
order, license, consent, waiver, authorization or approval of, or exemption by,
or the giving of notice to, or the registration with, or the taking of any
other action in respect of, any Person not a party to this Agreement, including
any Governmental Entity, and no filing, recording, publication or registration
in any public office or any other place is now, or under existing law in the
future will be, necessary on behalf of the Seller or any of the Shareholders to
authorize the execution, delivery and
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performance of this Agreement or any other agreement contemplated hereby to be
executed and delivered by the Seller or any of the Shareholders and the
consummation of the transactions contemplated hereby or thereby (including, but
not limited to, assignment of the Transferred Assets), or to effect the
legality, validity, binding effect or enforceability thereof.
(b) All licenses, permits, concessions, warrants,
franchises and other governmental authorizations and approvals of all
Governmental Entities required or necessary for the Seller to carry on the
Business in the places and in the manner currently conducted have been duly
obtained and are in full force and effect. No violations have been recorded or,
to the knowledge of the Seller and each of the Shareholders, are in existence
with respect to such licenses, permits or other authorizations and no
proceeding is pending or, to the best knowledge of the Seller and each of the
Shareholders, threatened with respect to the revocation or limitation of any of
such licenses, permits or other authorizations. The Seller has complied in all
material respects with all laws, rules, regulations and orders applicable to
the Business, and all rules, regulations and orders respecting the provision of
services by the Seller.
2.4 Title to and Condition of Properties.
(a) The Seller has good and marketable title to all
Equipment free and clear of all Liens, except Permitted Liens. All of the
Equipment is in the Seller's possession and control.
(b) The Seller has good and marketable title to all
Inventories free and clear of all Liens, except Permitted Liens. All
Inventories are in the Seller's possession and control except as set forth on
Section 2.4(b) of the Disclosure Schedule.
(c) The Accounts Receivable are owned by the Seller free
and clear of all Liens. All Accounts Receivable were generated in the ordinary
course of business and are believed to be collectable within 90 days following
the Closing Date, subject to any applicable reserves included on the Financial
Statements.
(d)(i) The Seller or the Affiliated Company owns, free and
clear of all Liens, other than Permitted Liens, or possesses licenses or other
rights to use all rights to all Proprietary Information necessary for the
conduct of the Business as currently conducted. At the Closing, the Seller, the
Shareholders and the Affiliated Company will transfer or cause to be
transferred all Proprietary Information necessary for the conduct of the
Business as currently conducted. Set forth in Section 1.1(a)(iv) of the
Disclosure Schedule is a complete and accurate list of all patents, trademarks
and licenses the Seller or the Affiliated Company owns or possesses or
otherwise has rights to use and that pertain to the Business. All Proprietary
Information that is licensed by the Seller from third parties is licensed
pursuant to valid and existing license agreements and such interests are not
subject to any Liens other than those under the applicable license agreements.
The consummation of the transactions contemplated by this Agreement will not
result in the loss of any Proprietary Information and will not conflict with,
constitute a breach, violation or termination of any agreement or
understanding, whether written or otherwise, relating to any Proprietary
Information necessary for the conduct of the Business as currently conducted.
(ii) No licenses, sublicenses, covenants or agreements
have been granted or entered into by the Seller or any of the Shareholders in
respect of the items listed in Section 1.1(a)(iv) of the Disclosure Schedule
except as noted thereon. None of the Seller or any of the Shareholders has
received any notice of infringement, misappropriation or conflict from any
other Person with respect to such Proprietary Information and the conduct of
the Business has not infringed, misappropriated or otherwise conflicted with
any Proprietary Information of any such Person. The Seller has not given any
indemnification for patent, trademark, service mark or copyright infringements
except to licensees or customers in the ordinary course of business. All of the
Proprietary Information that is owned by the Seller is owned free and clear of
all Liens and all such Proprietary Information will be transferred to the Buyer
free and clear of all Liens, including any claims by any claimed or alleged
co-inventors or co-owners.
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(e) All Real Property is set forth in Section 1.1(a)(v)
of the Disclosure Schedule. All leases of Real Property leased for the use or
benefit of the Seller and to which it is a party, and all amendments and
modifications thereof, are in full force and effect and there exists no default
under the leases by the Seller, nor any event that with notice or lapse of time
or both would constitute a default thereunder by the Seller.
(f) The Transferred Assets include all assets used in
connection with or relating to the Business of every type and description,
tangible and intangible, wherever located and whether or not reflected on the
books and records of the Seller (but not including Excluded Assets). To the
extent that any of the Transferred Assets are not in the possession (actual or
constructive) of the Seller, the Seller and the Shareholders shall cause the
holder thereof to transfer and assign such assets to the Buyer at the Closing.
2.5 Contracts and Commitments.
(a) Except as set forth in Section 2.5 of the Disclosure
Schedule, none of the Transferred Assets is subject to and the Seller is not a
party to or bound by: (i) any agreement, contract or commitment requiring the
expenditure or series of related expenditures of funds in excess of $10,000
(other than purchase orders in the ordinary course of business for goods
necessary for the Seller to complete then existing contracts or purchase
orders); (ii) any agreement, contract or commitment requiring the payment for
goods or services whether or not such goods or services are actually provided
or the provision of goods or services at a price less than the Seller's cost of
producing such goods or providing such services; (iii) 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) any Debt Obligations; (v) any management service, employment, consulting
or other similar type contract or agreement; (vi) any agreement, contract or
commitment that, by its terms, would limit the freedom of the Buyer or any of
its Affiliates following the Closing Date to engage in any line of business, to
own, operate, sell, transfer, pledge or otherwise dispose of or encumber any of
the Transferred Assets or to compete with any Person or to engage in any
business or activity in any geographic area; (vii) any agreement, lease,
contract or commitment or series of related agreements, leases, contracts or
commitments not entered into in the ordinary course of business or, except for
agreements to purchase or sell goods and services entered into in the ordinary
course of business of the Seller, not cancelable by the Seller without penalty
to the Seller within 30 calendar days; (viii) any agreement or contract
obligating the Seller or that would obligate or require any subsequent owner of
the Business or any of the Transferred Assets to provide for indemnification or
contribution with respect to any matter; (ix) any sales, distributorship or
similar agreement relating to the products sold or services provided by the
Seller; or (x) any license, royalty or similar agreement.
(b) The Seller is not in breach of any provision of, or
in default (and neither the Seller nor any of the Shareholders has any
knowledge of any event or circumstance that with notice, or lapse of time or
both, would constitute an event of default) under the terms of any of the
Entitlements that constitute a part of the Transferred Assets, except for such
breaches or defaults that would not materially and adversely affect the Seller,
the Business or the Transferred Assets. All of the Entitlements that constitute
a part of the Transferred Assets are in full force and effect. Neither the
Seller nor any of the Shareholders is aware of any pending or threatened
disputes with respect to any of the Entitlements. The enforceability of the
Entitlements that constitute a part of the Transferred Assets will not be
affected in any manner by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
2.6 Financial Statements. Attached as Section 2.6 of the Disclosure
Schedule are true, correct and complete copies of (i) the unaudited balance
sheets of the Seller as of December 31, 1998, and (ii) the unaudited statement
of income of the Seller for the year ended December 31, 1998 (collectively, the
"Financial Statements"). The Financial Statements (i) fairly present the
financial position of the Seller as of their respective dates and the results
of operations of the Business for the periods indicated therein, (ii) have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent
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basis throughout the periods covered by the Financial Statements and (iii) have
not been rendered untrue, incomplete or unfair as representations of the
financial condition of the Transferred Assets or the Business by events
subsequent to the date of the Financial Statements. The unaudited balance
sheets of the Seller as of December 31, 1998, are the most recently available
balance sheets of the Seller.
2.7 No Adverse Change. Since December 31, 1998, (a) no material
business segment of the Business has been adversely affected in any material
way as the result of any fire, explosion, accident, riot, civil or labor
disturbance, strike, boycott, lockout, flood, drought, storm, earthquake,
embargo or other casualty or act of God or the public enemy, and (b) there has
been no material adverse change in the condition of any material business
segment of the Business or in the condition of the assets of the Seller nor has
any event or condition occurred that could reasonably result in such a material
and adverse change.
2.8 Taxes.
(a) All Tax Returns that are required to be filed (taking
into account all extensions) on or before the Closing Date for, by, on behalf
of or with respect to the Seller, including, but not limited to, those relating
to the Business, the Transferred Assets and the Assumed Liabilities, and those
which include or should include the Seller, the Transferred Assets or the
Assumed Liabilities, have been or will be timely filed with the appropriate
foreign, federal, state and local authorities on or before the Closing Date,
and all Taxes shown to be due and payable on such Tax Returns or related to
such Tax Returns have been or will be timely paid in full on or before the
Closing Date.
(b) 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 Seller, the Business or the Transferred Assets, or with
respect to any such Tax Return, or any suits or other actions, proceedings,
investigations or claims now pending or threatened against the Seller, the
Business or the Transferred Assets with respect to any Tax, or any matters
under discussion with any foreign, federal, state or local authority relating
to any Tax, or any claims for any additional Tax asserted by any such
authority.
2.9 Environmental Matters.
(a) Except as set forth in Section 2.9(a) of the
Disclosure Schedule, neither the Seller nor, to the knowledge of the Seller and
each of the Shareholders, any prior owner or operator of the business conducted
by the Seller has caused or allowed the generation, use, treatment, storage, or
disposal of Hazardous Materials at any site or facility owned, leased or
operated by the Seller except to the extent the same would not, under current
laws, result in any liability, contingent or otherwise, to the Buyer or its
Affiliates.
(b) The Seller neither owns nor leases nor has
previously owned or leased any real property, improvements or related assets
that have been subject to the release of any Hazardous Materials.
(c) The Seller has secured all Environmental Permits
necessary to the conduct of the Business, all such Environmental Permits are
subsisting and in good standing, and the Seller is in compliance with such
permits.
(d) Neither the Seller nor any of the Shareholders has
received any notice, nor is the Seller or any of the Shareholders aware, of any
proposal to amend, revoke or replace any Environmental Permit, or requiring the
issuance of any additional Environmental Permit, the Transferred Assets or the
Business.
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(e) Neither the Seller nor any of the Shareholders has
received or is aware of any inquiry or notice of any actual or potential
proceedings, claims, lawsuits or losses related to or arising under any
Environmental Law and relating to the Seller.
(f) The Seller is not currently operating or required to
be operating under any compliance order, schedule, decree or agreement, any
consent decree, order or agreement, or corrective action decree, order or
agreement issued or entered into under any federal, state, provincial or local
statute, regulation or ordinance regarding the environment or health or safety
in the work place.
(g) To the best knowledge of the Seller and each of the
Shareholders, the Seller is in material compliance in all respects with all
applicable limitations, restrictions, conditions, standards, prohibitions,
requirements and obligations established under Environmental Laws.
(h) There are no underground storage tanks located on
any of the Transferred Assets.
(i) None of the Transferred Assets is encumbered by a
Lien arising or imposed under Environmental Laws.
(j) No notice or other filing, consent or approval is
required under any Environmental Law as a prerequisite to the transfer of the
Business and the Transferred Assets to the Buyer.
(k) The Seller and the Shareholders have provided the
Buyer with copies of all environmental audits, assessments or other evaluations
of the Business or any of the Transferred Assets that are in the possession of
the Seller or any of the Shareholders or any of their respective Affiliates,
consultants, agents or representatives.
2.10 No Litigation. Except as set forth in Section 2.10 of the
Disclosure Schedule, there is no action, suit, claim, judgment, investigation
or legal, administrative, arbitration or other proceeding, or governmental
investigation or examination, pending or, to the knowledge of the Seller and
each of the Shareholders, threatened against or affecting the Seller, the
Business or any of the Transferred Assets, at law or in equity, before or by
any Governmental Entity and, to the best knowledge of the Seller and each of
the Shareholders, no basis exists for any such action, suit, claim,
investigation or proceeding. To the knowledge of the Seller and each of the
Shareholders, there is no change in any zoning or building ordinance pending or
threatened against or affecting the Seller, the Business or any of the
Transferred Assets.
2.11 Warranties and Product Liability.
(a) Except for (i) warranties implied by law and (ii)
warranties disclosed in Section 2.11 of the Disclosure Schedule, the Seller has
not given or made any warranties in connection with the sale or rental of goods
or services on or prior to the Closing, including, without limitation,
warranties covering the customer's consequential damages. Neither the Seller
nor any of the Shareholders is aware of any state of facts or the occurrence of
any event forming the basis of any present claim against the Seller with
respect to warranties relating to products manufactured, sold or distributed by
the Seller or services performed by or on behalf of the Seller on or prior to
the Closing.
(b) To the knowledge of the Seller and each of the
Shareholders, there is no state of facts or any event forming the basis of any
present claim against the Seller, the Business or the Transferred Assets not
fully covered by insurance, except for deductibles and self-insurance
retentions, for personal injury or property damage alleged to be caused by
products shipped or services rendered by or on behalf of the Seller.
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2.12 Employee Matters.
(a) Except as set forth in Section 2.12(a) of the
Disclosure Schedule, there are no collective bargaining or other labor union
agreements to which the Seller is a party or by which it is bound. To the best
knowledge of the Seller and each of the Shareholders, the Seller has not
encountered any labor union organizing activity or had any actual or threatened
employee strikes, work stoppages, slowdowns or walkouts.
(b) Except as set forth in Section 2.12(b) of the
Disclosure Schedule, none of the Seller nor any corporation, trade, business or
entity under common control with the Seller (within the meaning of Section
414(b), (c) or (m) of the Code or Section 4001 of ERISA) currently sponsors,
maintains or contributes to, or during the last six years has sponsored,
maintained or contributed to, any employee benefit plan (within the meaning of
Section 3(3) of ERISA).
(c) The Seller does not contribute to or have an
obligation to contribute to, and has not at any time within six years prior to
the Closing Date contributed to or had an obligation to contribute to, a
multi-employer plan within the meaning of Section 3(37) of ERISA.
2.13 Finder's Fees. Except as set forth on Section 2.13 of the
Disclosure Schedule, none of the Seller or any of the Shareholders or any of
their respective Affiliates has employed or retained any investment banker,
broker, agent, finder or other party, or incurred any obligation for brokerage
fees, finder's fees or commissions, with respect to the sale by the Seller of
any of the Transferred Assets or with respect to the transactions contemplated
by this Agreement, or otherwise dealt with anyone purporting to act in the
capacity of a finder or broker with respect thereto whereby any party hereto
may be obligated to pay such a fee or commission. The Seller and each of the
Shareholders agree that they are responsible and liable for and will pay any
fees resulting from matters set forth on Section 2.13 of the Disclosure
Schedule and that any of such fees are not and will not be included in the
accrued liabilities on the Financial Statements. The Seller and each of the
Shareholders agree to indemnify and hold the Buyer and its Affiliates harmless
from and against any and all claims, liabilities or obligations with respect to
all fees, commissions or expenses asserted by any Person on the basis of any
act, statement, agreement or commitment alleged to have been made by the Seller
or any of the Shareholders or any Affiliate of the Seller or any of the
Shareholders with respect to any such fee, commission or expense.
2.14 Insurance. Section 2.14 of the Disclosure Schedule sets forth
all existing insurance policies held by the Seller relating to the Business or
the Transferred Assets. Copies of all such policies have been provided to the
Buyer. Each such policy is in full force and effect and is with responsible
insurance carriers. There is no dispute with respect to such policies, and all
claims arising from events or circumstances occurring prior to the date hereof
have been paid in full or adequate reserves therefor are recorded in the
Financial Statements.
2.15 Securities Law Matters.
(a) The Seller and each of the Shareholders recognize and
understand that the Weatherford Shares to be issued to the Seller (the
"securities") will not, except as expressly provided in Article 4, be
registered under the Securities Act, or under the securities laws of any state
(the "securities laws"). The securities are not being so registered in reliance
upon exemptions from the Securities Act and the securities laws which are
predicated, in part, on the representations, warranties and agreements of the
Seller and the Shareholders contained herein.
(b) The Seller and each of the Shareholders represent
and warrant that (i) the Seller has business knowledge and experience, such
experience being based on actual participation therein, (ii) the Seller is
capable of evaluating the merits and risks of an investment in the Weatherford
Shares and the suitability
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thereof as an investment therefor, (iii) the Weatherford Shares to be acquired
by the Seller will be acquired solely for investment and not with a view toward
resale or redistribution in violation of the securities laws, (iv) the Seller
is a corporation whose principal corporate offices are in Grand Junction,
Colorado, (v) in connection with the transactions contemplated hereby, no
assurances have been made concerning the future results of the Buyer or
Weatherford or as to the value of the Weatherford Shares and (vi) the Seller is
an "accredited investor" within the meaning of Regulation D promulgated by the
Commission pursuant to the Securities Act. The Seller understands that neither
Weatherford nor the Buyer is under any obligation to file a registration
statement or to take any other action under the securities laws with respect to
any such securities except as expressly set forth in Article 4 hereof.
(c) The Seller and each of the Shareholders have
consulted with their own counsel in regard to the securities laws and are fully
aware (i) of the circumstances under which the Seller is required to hold the
securities, (ii) of the limitations on the transfer or disposition of the
securities, (iii) that the securities must be held indefinitely unless the
transfer thereof is registered under the securities laws or an exemption from
registration is available and (iv) that no exemption from registration is
likely to become available for at least one year from the date of acquisition
of the securities. The Seller and each of the Shareholders have been advised by
their counsel as to the provisions of Rules 144 and 145 as promulgated by the
Commission under the Securities Act and have been advised of the applicable
limitations thereof. The Seller and each of the Shareholders acknowledge that
Weatherford and the Buyer are relying upon the truth and accuracy of the
representations and warranties in this Section 2.15 by the Seller and each of
the Shareholders in consummating the transactions contemplated by this
Agreement without registering the securities under the securities laws.
(d) The Seller and each of the Shareholders have been
furnished with the SEC Documents. The Seller and each of the Shareholders have
been furnished with a summary description of the terms of this Agreement, the
Weatherford Shares and Weatherford, and the Buyer and Weatherford have made
available to the Seller and each of the Shareholders the opportunity to ask
questions and receive answers concerning the terms and conditions of the
transactions contemplated by this Agreement and to obtain any additional
information which they possess or could reasonably acquire for the purpose of
verifying the accuracy of information furnished to the Seller and the
Shareholders as set forth herein or for the purpose of considering the
transactions contemplated hereby. Weatherford has offered to make available to
the Seller and each of the Shareholders upon request at any time all exhibits
filed by Weatherford with the Commission as part of any of the reports filed
therewith.
(e) The Seller and each of the Shareholders agree that
the certificates representing the Weatherford Shares will be imprinted with the
following legend, the terms of which are specifically agreed to:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, OR THE SECURITIES LAWS OF ANY STATE, IN RELIANCE UPON EXEMPTIONS
FROM REGISTRATION REQUIREMENTS. WITHOUT SUCH REGISTRATION, SUCH SHARES
MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED,
EXCEPT UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED FOR SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER OR THE
SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE, PLEDGE,
HYPOTHECATION OR TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER.
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The Seller and each of the Shareholders understand and agree that appropriate
stop transfer notations will be placed in the records of Weatherford and with
its transfer agents in respect of the securities which are to be issued to the
Seller. Weatherford agrees that any Weatherford Shares sold pursuant to an
effective registration statement, including a registration statement filed
pursuant to Article 4 hereof, shall have the above legend removed to permit the
closing of the sale within three Business Days of written notice of the sale
and certification by the Seller that the sale was made pursuant to the plan of
distribution described in the registration statement and the prospectus
delivery requirements under the Securities Act were fully complied with in
connection with the sale.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND WEATHERFORD
The Buyer and Weatherford, jointly and severally, represent and
warrant to the Seller and the Shareholders as follows:
3.1 Corporate Matters. The Buyer is a limited partnership validly
existing and in good standing under the laws of Louisiana. Weatherford is a
corporation validly existing and in good standing under the laws of Delaware.
Each of Weatherford and the Buyer has all requisite power and authority to
enter into this Agreement and to perform its obligations under this Agreement.
This Agreement has been duly authorized, executed and delivered by each of
Weatherford and the general partner of the Buyer (the "Buyer General Partner")
and is a legal, valid and binding obligation of each of Weatherford and the
Buyer, enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect that affect creditors' rights
generally and by legal and equitable limitations on the availability of
specific remedies. The execution and delivery of this Agreement by each of
Weatherford and the Buyer General Partner and the consummation of the
transactions contemplated hereby by Weatherford and the Buyer will not violate
any provision of, or constitute a default under, any contract or other
agreement to which either of Weatherford or the Buyer is a party or by which it
is bound, or conflict with its organizational documents, other than violations,
defaults or conflicts that would not materially and adversely affect the
ability of Weatherford or the Buyer to consummate the transactions provided for
in this Agreement.
3.2 Approvals, Licenses and Authorizations. Except for the filing
of a pre-merger notification and report form under the HSR Act, no order,
license, consent, waiver, authorization or approval of, or exemption by, or the
giving of notice to, or the registration with, or the taking of any other
action in respect of, any Person not a party to this Agreement, including any
Governmental Entity, and no filing, recording, publication or registration in
any public office or any other place is now, or under existing law in the
future will be, necessary on behalf of the Buyer or Weatherford to authorize
its execution, delivery and performance of this Agreement or any other
agreement contemplated hereby to be executed and delivered by the Buyer or
Weatherford and the consummation by the Buyer and Weatherford of the
transactions contemplated hereby or thereby, or to effect the legality,
validity, binding effect or enforceability thereof.
3.3 Finder's Fees. Neither the Buyer, Weatherford nor any of their
respective Affiliates has employed or retained any investment banker, broker,
agent, finder or other party, or incurred any obligation for brokerage fees,
finder's fees or commissions, with respect to the transactions contemplated by
this Agreement, or otherwise dealt with anyone purporting to act in the
capacity of a finder or broker with respect thereto whereby any party hereto
may be obligated to pay such a fee or a commission. The Buyer and Weatherford,
jointly and severally, agree to indemnify and hold the Seller and the
Shareholders and their Affiliates harmless from and against any and all claims,
liabilities or obligations with respect to all fees, commissions or expenses
asserted by any Person on the basis of any act, statement, agreement or
commitment
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alleged to have been made by the Buyer or any Affiliate of the Buyer with
respect to any such fee, commission or expense.
3.4 Authorization for the Weatherford Shares. Weatherford has
taken, or will have taken prior to Closing, all necessary action to permit it
to issue the Weatherford Shares. The Weatherford Shares issued pursuant to the
terms of this Agreement will be validly issued, fully paid and nonassessable
and not subject to preemptive rights. The Weatherford Shares will be listed on
the New York Stock Exchange.
3.5 SEC Documents. Weatherford has made available to the Seller
and each of the Shareholders all of the SEC Documents. The SEC Documents
represent each report filed by Weatherford with the Commission since March 27,
1998. As of their respective dates, the SEC Documents (i) were prepared in all
material respects in accordance with the applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder applicable to such documents and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading except for such
statements, if any, as have been modified by subsequent filing with the
Commission prior to the date hereof. The consolidated financial statements of
Weatherford included in the SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of
Weatherford and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. Since December 31, 1997, other than as discussed in the SEC Documents,
there has been no material adverse change in the business of Weatherford and
its Subsidiaries, taken as a whole.
ARTICLE 4
REGISTRATION RIGHTS
4.1 Registration Rights.
(a) Weatherford will use its best efforts to register
under the Securities Act the Weatherford Shares pursuant to a non-underwritten
offering having a period of distribution not to exceed one year from the
Closing Date. In furtherance of such obligation, Weatherford shall file, within
30 Business Days after the Closing Date, with the Commission a registration
statement on the appropriate form seeking the registration for resale of the
Weatherford Shares (the "Registration Statement"), pursuant to a
non-underwritten offering in accordance with the plan of distribution described
therein. References in this Article 4 to the Weatherford Shares shall be deemed
to include any shares of Common Stock or other securities received by the
Seller Group on account of any stock split, stock dividend or merger of
Weatherford.
(b) Notwithstanding anything to the contrary contained
in this Section 4.1, Weatherford shall not be obligated to prepare and file the
Registration Statement pursuant to this Section 4.1, or prepare or file any
amendment or supplement thereto, at any time when Weatherford reasonably
believes that the filing thereof, or the offering of securities pursuant
thereto, would adversely affect a pending or proposed public offering of
securities of Weatherford, an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction relating to Weatherford or
negotiations, discussions or pending proposals with respect thereto or require
premature disclosure of information not otherwise required to be disclosed to
the potential detriment of Weatherford.
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(c) Notwithstanding anything to the contrary contained
in this Section 4.1, Weatherford shall be permitted, on written notice to the
Seller Group, to suspend the period of sale or distribution of the Weatherford
Shares at any time when Weatherford reasonably believes that the sale or
distribution thereof would adversely affect a pending or proposed public
offering of securities of Weatherford, an acquisition, merger,
recapitalization, consolidation, reorganization or similar transaction relating
to Weatherford or negotiations, discussions or pending proposals with respect
thereto or require premature disclosure of information not otherwise required
to be disclosed to the potential detriment of Weatherford.
(d) The filing of the Registration Statement, or any
amendment or supplement thereto, by Weatherford may not be deferred pursuant to
Section 4.1(b), and the sale and distribution of the Weatherford Shares may not
be suspended pursuant to Section 4.1(c), for more than 60 days after the
abandonment or consummation (or the completion of the distribution of
securities in the case of a public offering) of any of the proposals or
transactions described therein or, in any event, for more than 120 days in any
twelve-month period.
(e) The Seller Group agrees and covenants to fully
cooperate with and assist Weatherford and its counsel and representatives in
connection with Weatherford's obligations under this Article 4, including
providing such information as reasonably requested by Weatherford in connection
the preparation of the Registration Statement and the resale of the Weatherford
Shares.
4.2 Procedure. Weatherford will, subject to the provisions of
Sections 4.1, 4.2 and 4.4 hereof:
(a) seek to cause the Registration Statement to become
and remain effective;
(b) as expeditiously as reasonably practicable, prepare
and file with the Commission such amendments and supplements to the
Registration Statement and the prospectus used in connection therewith as may
be necessary to keep the Registration Statement effective and to comply with
the provisions of the Securities Act with respect to the disposition of the
Weatherford Shares covered by the Registration Statement in accordance with the
intended method of distribution set forth therein;
(c) as expeditiously as reasonably practicable, furnish
to the Seller Group such number of copies of prospectuses and preliminary
prospectuses in conformity with the requirements of the Securities Act, and
such other documents as the Seller Group may reasonably request, in order to
facilitate the public sale or other disposition of the Weatherford Shares owned
by the Seller Group; provided, however, that the obligation of Weatherford to
deliver copies of prospectuses or preliminary prospectuses to the Seller Group
shall be subject to the receipt by Weatherford of reasonable assurances from
the Seller Group that it will comply with the applicable provisions of the
Securities Act and of such other securities laws as may be applicable in
connection with any use by it of any prospectuses or preliminary prospectuses;
(d) as expeditiously as practicable, use its best
efforts to register or qualify the Weatherford Shares under such other
securities laws of such United States jurisdictions as the Seller Group shall
reasonably request (considering the nature and size of the offering) and do any
and all other acts and things which may be necessary or desirable to enable the
Seller to consummate the public sale or other disposition in such jurisdictions
of the Weatherford Shares; provided, however, that Weatherford shall not be
required to qualify to transact business as a foreign corporation in any
jurisdiction in which it would otherwise not be required to be so qualified or
to take any action which would subject it to general service of process in any
jurisdiction in which it is not then so subject;
(e) bear all Registration Expenses (as defined below) in
connection with the registration hereunder; provided, however, that all Selling
Expenses (as defined below) of the Weatherford Shares and all fees and
disbursements of counsel for the Seller Group shall be borne by the Seller
Group. For purposes of this Section 4.2, expenses incurred by Weatherford in
complying with this Agreement include (i) all
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registration and filing fees; (ii) all printing expenses, (iii) all fees and
disbursements of counsel for Weatherford, (iv) all blue sky fees and expenses,
and (v) all fees and expenses of accountants for Weatherford are herein
referred to as "Registration Expenses". All brokerage and selling commissions
and fees and expenses of counsel for the Seller Group in connection with any
such registration or resale are herein referred to as "Selling Expenses"; and
(f) keep the registration pursuant to Section 4.1 hereof
effective for a period of up to one year following the Closing Date or such
shorter period of time until the transfer or sale of all the Weatherford Shares
has been completed.
4.3 Indemnification.
(a) In the event of a registration of the Weatherford
Shares under the Securities Act pursuant to this Agreement,
Weatherford will indemnify and hold harmless the Seller Group and any other
Person, if any, who controls the Seller Group within the meaning of Section 15
of the Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which the Seller Group or such controlling Person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities or actions in respect thereof arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained, on the effective date thereof, in the Registration Statement,
any preliminary prospectus distributed with the consent of Weatherford or final
prospectus contained therein, or any amendment thereof or supplement thereto,
including all documents incorporated by reference therein, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will, unless Weatherford assumes the defense as provided in
Section 4.3(c), promptly following request and receipt of reasonable supporting
documents, such as invoices, reimburse the Seller Group and each such
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that Weatherford will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement,
such preliminary prospectus, such final prospectus or such amendment or
supplement, including all documents incorporated by reference therein, in
reliance upon and in conformity with written information furnished to
Weatherford by or on behalf of the Seller Group or a controlling Person thereof
specifically for use in the preparation thereof.
(b) In the event of any registration of the Weatherford
Shares under the Securities Act pursuant to this Agreement, the Seller and the
Shareholders will jointly and severally indemnify and hold harmless Weatherford
and the Buyer and each Person, if any, who controls Weatherford or the Buyer
within the meaning of Section 15 of the Securities Act, each officer of
Weatherford who signs the Registration Statement, each director of Weatherford
and each Person who controls any underwriter (if any) within the meaning of
Section 15 of the Securities Act, against any and all such losses, claims,
damages, liabilities or actions which Weatherford or such officer, director,
underwriter (if any) or controlling Person may become subject under the
Securities Act or otherwise, and will reimburse Weatherford, each such officer,
director, underwriter (if any) and controlling Person for any legal or any
other expenses reasonably incurred by such party in connection with
investigating or defending any such loss, claim, damage, liability or action,
if (i) such loss, claim, damage, liability or action in respect thereof arises
out of or is based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any such prospectus,
or any amendment thereof or supplement thereto, or arises out of or is based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
and such statement or omission of a material fact was made in reliance upon
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and in conformity with information furnished to Weatherford by or on behalf of
the Seller Group specifically for use in connection with the preparation of the
Registration Statement or prospectus or (ii) such loss, claim, damage,
liability or action in respect thereof arises out of or is based upon the
Seller Group's failure to deliver any required prospectus or otherwise comply
with applicable laws regarding the same. In addition, as a condition to the
inclusion of any Weatherford Shares held by any other member of the Selling
Group in any registration of the Weatherford Shares under the Securities Act
pursuant to this Agreement, such Person shall agree to be bound by the
indemnification obligations set forth in this Article 4, but only with respect
to information provided by or on behalf of such Person.
(c) Promptly after receipt by any indemnified Person of
notice of any claim or commencement of any action in respect of which indemnity
is to be sought against an indemnifying Person pursuant to this Agreement, such
indemnified Person shall notify the indemnifying Person in writing of such
claim or of the commencement of such action, and, subject to provisions
hereinafter stated, in case any such action shall be brought against an
indemnified Person and such indemnifying Person shall have been notified of the
same, such indemnifying Person shall be entitled to participate therein, and,
to the extent it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified Person, and after notice from the
indemnifying Person to such indemnified Person of its election to assume the
defense thereof, such indemnifying Person shall not be liable to such
indemnified Person in connection with the defense thereof; provided, however,
if there exists or will exist a conflict of interest which would make it
inappropriate in the reasonable judgment of the indemnified Person for the same
counsel to represent both the indemnified Person and such indemnifying Person
then such indemnifying Person shall be entitled to retain its own counsel at
the expense of such indemnifying Person; provided further, however, the
indemnifying Person shall not be required to pay for more than one separate
counsel for all of the indemnified Persons in addition to any local counsel.
Payment of any amounts due pursuant to this Section 4.3 shall be made within
ten Business Days after notice is sent by the indemnified Person.
4.4 Termination. If the holding period under Rule 144 or Rule 145
as promulgated under the Securities Act or any successor or similar rule or
statute is reduced to permit the sale of the Weatherford Shares, the rights of
the Seller Group as to the registration provided for in this Agreement as to
the Weatherford Shares shall terminate immediately.
4.5 Put Option. If the Registration Statement has not been
declared effective by the Commission by April 1, 2000, the Seller Group shall
have the right, exercisable upon written notice to Weatherford signed by the
Shareholders, to require Weatherford to purchase up to an aggregate maximum of
137,500 of the Weatherford Shares, at a price per share equal to the closing
sales price of the Common Stock on the date such notice is given to
Weatherford, as reported by the New York Stock Exchange.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Access to Information.
(a) Until the Closing, the Seller and each of the
Shareholders will furnish the Buyer and its employees, officers, accountants,
attorneys, agents, investment bankers and other authorized representatives with
all financial, operating and other data and information concerning the
Business, commitments and properties of the Seller as the Buyer shall from time
to time reasonably request and will afford the Buyer and its employees,
officers, accountants, attorneys, agents, investment bankers and other
authorized representatives reasonable access to the Seller's offices,
properties, books, records, contracts and documents and will be given the
opportunity to ask questions of, and receive answers from, representatives of
the Seller with respect to the Transferred Assets. As part of its
investigation, the Buyer shall have the right
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(subject to any required consent from an owner of the Real Property) to conduct
environmental assessments of the Transferred Assets, including soil and
groundwater sampling, as it deems appropriate. No investigations by the Buyer
or its employees, representatives or agents shall reduce or otherwise affect
the obligation or liability of the Seller or any of the Shareholders with
respect to any representations, warranties, covenants or agreements made herein
or in any exhibit, schedule or other certificate, instrument, agreement or
document, including the Disclosure Schedule, executed and delivered in
connection with this Agreement. The Seller and each of the Shareholders will
cooperate with the Buyer and its employees, officers, accountants, attorneys,
agents and other authorized representatives in the preparation of any documents
or other materials that may be required by any Governmental Entity.
(b) Each party hereto agrees to hold in confidence all,
and not to disclose to others for any reason whatsoever, any non-public
information received by it or its representatives from the other parties hereto
in connection with the transactions contemplated by this Agreement except (i)
as required by law; (ii) for disclosure to officers, directors, employees and
representatives of such party as necessary in connection with the transactions
contemplated hereby or as necessary to the operation of such party's business;
and (iii) for information that becomes publicly available other than through
such party. If the transactions contemplated by this Agreement are not
consummated, each party hereto will return to the other parties hereto all
non-public documents and other material obtained from such other parties
hereto, and all copies, summaries and extracts thereof, or certify to such
other party hereto that such information has been destroyed.
5.2 Conduct of the Business. The Seller and each of the
Shareholders covenant and agree with the Buyer that from and after the date
hereof until the Closing, except as expressly authorized by this Agreement or
as expressly consented to in writing by the Buyer, the Seller shall, and the
Shareholders shall cause the Seller to:
(a) operate the Business and the Transferred Assets only in
the usual, regular and ordinary manner with a view to maintaining the
goodwill that the Seller now enjoys and, to the extent consistent with
such operation, will use all reasonable efforts to preserve intact the
Seller's present business organization, keep available the services of
the Seller's employees and preserve the Seller's relationships with
its customers, suppliers, jobbers, distributors and other Persons
having business relations with the Seller;
(b) use all reasonable efforts to maintain the Transferred
Assets in a state of repair, order and condition consistent with its
usual past practice;
(c) maintain the Seller's books of account and records
relating to the Business in the usual, regular and ordinary manner, in
accordance with the Seller's usual accounting practices applied on a
consistent basis;
(d) comply in all material respects with all statutes, laws,
orders and regulations applicable to the Seller and to the Business;
(e) not sell, assign, transfer, lease or otherwise dispose
of any of the Transferred Assets except for dispositions of
Inventories for value in the usual and ordinary course of business;
(f) preserve and maintain all rights that the Seller now
enjoys in and to the Proprietary Rights and not sell, assign,
transfer, lease or otherwise dispose of any Proprietary Rights other
than to the Buyer pursuant to the terms of this Agreement;
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(g) not mortgage, pledge or otherwise create a security
interest in any of the Transferred Assets or permit there to be
created or exist any Liens thereon (other than Permitted Liens) that
would not be released upon the transfer of the Transferred Assets to
the Buyer pursuant to this Agreement;
(h) not enter into any contract, commitment or lease in
relation to the Business or the Transferred Assets that is out of the
ordinary course of business;
(i) not amend or modify any of the Entitlements;
(j) not consent to the termination of any of the Entitlements
or waive any of the Seller's rights with respect thereto;
(k) not permit any insurance policy naming the Seller as a
beneficiary or a loss payee relating to the Business or the
Transferred Assets to be canceled or terminated or any of the coverage
thereunder to lapse unless simultaneously with such termination or
cancellation replacement policies providing substantially the same
coverage are in full force and effect;
(l) pay when due all accounts payable, all payments required
by any of the Entitlements and all Taxes other than Taxes that are
being contested in good faith and for which adequate reserves against
the Transferred Assets exist and which would not result in a Lien
being imposed on any of the Transferred Assets; and
(m) promptly notify the Buyer in writing if the Seller or any
of the Shareholders becomes aware of any change that shall have
occurred or that shall have been threatened (or any development that
shall have occurred or that shall have been threatened involving a
prospective change) in the Business or the Transferred Assets that
would reasonably be expected to have a material or adverse effect on
the Business or the Transferred Assets whether or not occurring in the
ordinary course of business.
5.3 Negotiation with Others. The Seller and each of the
Shareholders agree that from the date hereof until the Closing Date or the
termination of this Agreement pursuant to Section 10.1, such Person will not,
directly or indirectly, solicit, encourage or negotiate with any Person not a
party hereto or not affiliated with a party hereto with respect to a merger,
consolidation, asset or stock purchase or any similar transaction with the
Seller.
5.4 Information. During the period from the date of this Agreement
to the Closing Date, the Buyer and the Seller and each of the Shareholders will
promptly inform the others in writing of any claim, action or any proceeding
commenced against such party with respect to the transactions contemplated by
this Agreement or any assets or property of the Seller or the Transferred
Assets.
5.5 Delivery of Business Documents. At Closing, the Seller and the
Shareholders shall deliver to the Buyer all Documents and Other Papers relating
to the Transferred Assets, the Assumed Liabilities and the current and proposed
operations of the Business, including, without limitation, all files relating
to the Accounts Receivable, the Assumed Trade Payables, copies of all insurance
policies and all files relating thereto, computer disks reflecting any books or
records, documents or other papers, or other information or data relating to
the operation of the Business, the Transferred Assets or the Assumed
Liabilities stored on any electronic media, including computers. The Seller,
however, shall be entitled to retain the corporate minute books, stock books
and tax returns of the Seller and to have access to the books and records
relating to the Business to the extent such books and records are necessary for
the preparation of tax returns.
5.6 Further Assurances. The Seller and each of the Shareholders
shall execute, acknowledge and deliver or cause to be executed, acknowledged
and delivered to the Buyer such bills of sale, assignments
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(including but not limited to assignments of leases) and other instruments of
transfer, assignment and conveyance, in form and substance reasonably
satisfactory to counsel for the Buyer, as shall be necessary to vest in the
Buyer all the right, title and interest in and to the Transferred Assets free
and clear of all Liens (including the release of all Liens of record) and shall
use their best efforts to cause to be taken such other action as the Buyer
reasonably may require to more effectively implement and carry into effect the
transactions contemplated by this Agreement.
5.7 Nondisclosure of Proprietary Information.
(a) The Seller and each of the Shareholders agree that,
from and after the Closing, such Seller or Shareholder and such Person's
Affiliates shall (i) hold in confidence and will not directly or indirectly at
any time reveal, report, publish, disclose or transfer to any Person other than
the Buyer any of the Proprietary Information that is not generally known to the
public or utilize any of the Proprietary Information for any purpose and (ii)
not for a period of three years solicit or hire any employees of the Seller who
are subsequently employed by the Buyer or offered employment by the Buyer.
(b) The Seller and each of the Shareholders acknowledge
that all Documents and Other Papers and objects containing or reflecting any
Proprietary Information, whether developed by such Seller or Shareholder or by
someone else for such Seller or Shareholder or any of such Person's Affiliates,
will after the Closing become the exclusive property of the Buyer and be
delivered to the Buyer.
(c) Because of the unique nature of the Proprietary
Information, the Seller and each of the Shareholders understand and agree that
the breach or anticipated breach of the obligations under this Section 5.7 will
result in immediate and irreparable harm and injury to the Buyer and its
Affiliates, for which it will not have an adequate remedy at law, and that the
Buyer and its Affiliates and their successors and assigns shall be entitled to
relief in equity to enjoin such breach or anticipated breach and to seek any
and all other legal and equitable remedies to which they may be entitled.
5.8 Covenant Not to Compete With the Business. As an inducement
for the Buyer to acquire the Business, the Seller and each of the Shareholders
agree that, effective as of the Closing Date and for a period of three years
thereafter, none of the Seller, the Shareholders nor any of their respective
Affiliates, including the Affiliated Company, shall, without the consent of the
Buyer or as expressly permitted in the Supply Agreement, directly or
indirectly, design, develop, market, produce, manufacture, sell or provide any
compressors, UBD Chemicals (as defined in the Supply Agreement) or software for
use in underbalanced drilling applications, or engage in engineering activities
or provide services related thereto, in any geographical area of the world, or,
except for the benefit of Buyer and its Affiliates, assist any Person to do the
same. The Seller and each of the Shareholders acknowledge that a remedy at law
for any breach or attempted breach of this Section 5.8 will be inadequate and
further agree that any breach of this Section 5.8 will result in irreparable
harm to the Business and the Buyer 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. The
Seller and each of the Shareholders acknowledge that this covenant not to
compete is being provided as an inducement to the Buyer to acquire the Business
and the Transferred Assets and that this Section 5.8 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 the Buyer. Whenever possible, each
provision of this Section 5.8 shall be interpreted in such a manner as to be
effective and valid under applicable law but if any provision of this Section
5.8 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 5.8. If any provision of
this Section 5.8 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 5.8 but shall be confined in
its operation to the provision of this Section 5.8 directly involved in the
controversy in which such judgment shall have been rendered. In the event that
the provisions of this Section 5.8 should ever be
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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.
5.9 Use of Names. All uses of the names "ECD/Northwest, Inc." and
"ECD" or any derivations thereof (collectively, the "Names") are being
transferred to the Buyer hereunder as part of the Transferred Assets. The
Seller and each of the Shareholders agree not to take any action which could
reasonably be expected to adversely affect the Buyer's right to the Names or
cause confusion with respect to the Buyer's use of the Names. All goodwill with
respect to the use of the Names will inure to the benefit of the Buyer, and
none of the Seller or any of the Shareholders will have any rights to sue or
recover against any person with respect to the use of the Names. Within ten
days after Closing, the Seller agrees to take all necessary action to change
the Seller's name to one bearing no resemblance to any of the Names or any
derivation thereof and will forever cease the use of such names.
5.10 Employee Matters
(a) The Buyer shall offer employment to the employees
of the Seller on terms substantially similar to those offered by the Buyer to
similarly situated employees. Any such employees that the Buyer in fact employs
immediately after the Closing Date shall hereinafter be referred to as the
"Transferred Employees". All of the Seller's employees who are not employed by
the Buyer or one of its Affiliates immediately after the Closing Date shall
hereinafter be referred to as the "Seller Retained Employees". The Seller and
the Shareholders shall be responsible and liable for any and all severance
obligations with respect to the Seller Retained Employees, including any COBRA
obligations.
(c) The parties hereto do not intend to create any
third-party beneficiary rights respecting any employee of the Seller as a
result of the provisions hereof and specifically hereby negate any such
intention.
(d) 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 Transferred Employees under the Buyer's
normal policies, service with the Seller shall be considered by the Buyer as
service with the Buyer.
5.11 HSR Filing.
(a) Weatherford, the Buyer, the Seller and CHI
(collectively, the "HSR Parties") shall make all premerger notification and
report form filings required under the HSR Act as promptly as reasonably
possible following execution and delivery of this Agreement. Each of the HSR
Parties agrees to use reasonable efforts to respond promptly to, and fully
address, any formal or informal inquiry or request for information by a
Governmental Entity regarding the transactions contemplated hereby.
(b) Each of the HSR Parties will furnish one another
copies of all correspondence, filings or communications (or memoranda setting
forth the substance thereof (collectively, "HSR Documents")) between such HSR
Party, or any of its respective representatives, on the one hand, and any
Governmental Entity, or members of the staff of such agency or authority, on
the other hand, with respect to this Agreement; provided, however, that (i)
with respect to documents and other materials filed by or on behalf an HSR
Party with the Antitrust Division of the Department of Justice, the Federal
Trade Commission or any state attorneys general that are otherwise available
for review by the other HSR Parties, copies will not be required to be so
provided, (ii) the other HSR Parties may redact all revenue figures relating to
any service not provided or any product not manufactured or sold by the other
HSR Parties or any of their respective Subsidiaries (according to such other
HSR Parties' HSR Documents) and (iii) with respect to any HSR Party's Documents
(A) that contain any information which, in the reasonable judgment of such HSR
Party's counsel, should not be furnished to such other HSR Parties' counsel
because of antitrust considerations or (B) relating to a request
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for additional information pursuant to Section (e)(1) of the HSR Act, the
obligation of an HSR Party to furnish any such HSR Documents to the other HSR
Party's counsel shall be satisfied by the delivery of such HSR Documents on a
confidential basis to such other HSR Parties' counsel pursuant to an
appropriate confidentiality agreement to be entered into by Houston Harbaugh,
P.C., on behalf of the Seller and CHI and Fulbright & Jaworski L.L.P., on
behalf of Weatherford and the Buyer.
(c) Notwithstanding the foregoing provisions in this
Section 5.11, nothing contained in this Agreement shall be construed so as to
require any of the HSR Parties, or any of their respective Affiliates, to sell,
license, dispose of or hold separate, or to operate in any specified manner,
any of their respective assets or businesses (or to require any of the HSR
Parties or any of their respective Subsidiaries or Affiliates to agree to any
of the foregoing). The obligations of each HSR Party under Section 5.11(a)
hereto to use reasonable efforts with respect to antitrust matters shall be
limited to compliance with the reporting provisions of the HSR Act and with its
obligations under Section 5.11(b).
5.12 Continuation of Business by the Buyer. Nothing in this
Agreement, in any exhibit or schedule thereto or in any agreement, instrument
or other document executed or delivered in connection with this Agreement shall
require the Buyer to continue the Business or to manage and operate the
Transferred Assets with any duty or standard or care to the Seller or any of
the Shareholders. The Seller and each of the Shareholders acknowledge and agree
that the Buyer in its sole discretion may continue, manage, modify or
discontinue the operations, liquidate or otherwise change or cease the
operations of the Business and the Transferred Assets. Notwithstanding the
foregoing, if, prior to the Contingent Payment Date, the Buyer sells the
Business to a Person that is not an Affiliate of the Buyer, the Buyer shall pay
the maximum Contingent Payment that would be required under this Agreement. A
merger, share exchange, consolidation or similar business combination involving
Weatherford shall not be considered a sale of the Business nor shall any
transfer or assignment of the assets or business constituting the Business to
an Affiliate of Weatherford be considered a sale of the Business.
5.13 Saipem Contract. If the Buyer is awarded one or more contracts
(collectively the "Saipem Contract") with Saipem ("Saipem") relating to the
dewatering with compressed air of proposed pipelines to be constructed by
Saipem through the Black Sea or the Mediterranean Sea (the "Project"), the
Buyer will make the following payments to CHI:
(a) $250,000, if the Buyer and Saipem execute a letter
of intent or similar agreement relating to the Project;
(b) $750,000, if the Buyer and Saipem execute a
definitive contract relating to the Project, less any payment under clause (a);
and
(c) five percent of all contract revenues from
dewatering services for the first five years of the Project, including
dewatering services for other pipelines if such pipelines are included in the
Project; provided, however, that any payments made under clauses (a) and (b) of
this Section 5.13 shall be credited against any payments due under this clause
(c).
All payments made under Section 5.13 (a) and (b) shall be made by wire transfer
of immediately available funds to an account designated by CHI within ten
Business Days of the event requiring payment. Payments under Section 5.13(c)
shall be made on a quarterly basis, commencing at the end of the first
three-month period during which contract revenues are received. CHI and its
authorized representatives shall have the right, no more than once quarterly,
upon reasonable prior notice and during business hours, to examine the Buyer's
records to confirm the amount of contract revenues received by the Buyer during
the preceding calendar quarter. Contract revenues shall be net of Taxes,
duties, delivery charges, insurance and any third party pass-through charges.
Notwithstanding the foregoing, neither the Buyer nor Weatherford shall have
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any obligation to pursue the Project and shall have no obligation to CHI if
they determine in their sole discretion not to do so.
ARTICLE 6
BUYER'S AND WEATHERFORD'S CONDITIONS
The obligation of the Buyer to purchase the Transferred Assets and to
assume the Assumed Trade Payables and the Assumed Liabilities as contemplated
hereby is, at the option of the Buyer and Weatherford, subject to the
satisfaction on or before the Closing Date of the conditions set forth below,
any of which may be waived by the Buyer and Weatherford in writing; provided,
however, the Buyer's and Weatherford's election to proceed with the Closing
shall not be deemed a waiver of any breach of any representation, warranty or
covenant herein, whether or not known to the Buyer or Weatherford or existing
on the Closing Date, and such action shall not prejudice the Buyer's and
Weatherford's right to recover damages for any such breach.
6.1 Representations, Warranties and Covenants. The representations
and warranties of the Seller and each of the Shareholders contained in this
Agreement shall be true, correct and complete in all respects on and as of the
Closing Date with the same force and effect as though such representations and
warranties had been made or given on and as of such date. Each and all of the
agreements and covenants of the Seller and each of the Shareholders to be
performed or complied with by them on or before the Closing Date pursuant to
this Agreement shall have been performed or complied with in all respects. The
Seller and each of the Shareholders shall have delivered to the Buyer a
certificate dated the Closing Date regarding the matters set forth in this
Section 6.1.
6.2 Good Standing. The Seller shall have delivered to the Buyer
certificates issued by appropriate Governmental Entities evidencing the good
standing of the Seller, as of a date not more than five calendar days prior to
the Closing Date in Delaware, and as of a date not more than fifteen calendar
days prior to the Closing Date in the jurisdictions in which it is qualified to
do business as a foreign corporation. To the extent provided for under
applicable law, the Seller shall also have delivered to the Buyer certificates
or other writings issued by appropriate Governmental Entities evidencing that
all applicable state income or franchise Taxes of the Seller have been paid.
6.3 Instruments of Transfer. The Seller shall have executed,
acknowledged and delivered to the Buyer such bills of sale, assignments
(including but not limited to assignments of the leases) and other instruments
of transfer, assignment and conveyance, as shall be necessary to vest in the
Buyer all right, title and interest in and to the Transferred Assets.
6.4 No Litigation. No preliminary or permanent injunction or other
order of any court or other Governmental Entity shall be in effect nor shall
there be in effect any statute, rule, regulation or executive order promulgated
or enacted by any Governmental Entity that, in any such case, prevents the
consummation of the transactions contemplated by this Agreement. No suit,
action, claim, proceeding or investigation before any Governmental Entity shall
have been commenced or threatened by any Person other than the Buyer or any of
its Affiliates seeking to prevent the sale of the Transferred Assets or
asserting that the sale of all or a portion of the Transferred Assets would be
unlawful.
6.5 Other Legal Matters. All Exhibits, Schedules, certificates,
documents and legal matters in connection with this Agreement and the
transactions contemplated hereby shall be in substantially the forms required
by this Agreement.
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6.6 Licenses, Consents and Approvals by the Seller. All necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity shall have been obtained,
made, expired or lapsed and shall be in full force and effect. The Seller shall
have delivered to the Buyer a copy of each of the licenses, consents, approvals
and other authorizations from Governmental Entities necessary or appropriate
for the Seller to consummate the transactions contemplated by this Agreement.
6.7 Consents of Third Persons. All Required Consents (other than
master service contracts relating to vendor qualification and the Consulting,
Non-Disclosure and Non-Competition Agreement with Jerry D. Smith) shall have
been obtained on terms satisfactory to the Buyer and delivered to the Buyer.
6.8 Consents and Release of Liens. All Liens (other than Permitted
Liens, except to the extent such Permitted Liens relate to Debt Obligations of
the Seller) on the Transferred Assets shall be released at Closing and
satisfactory evidence of the release of the Liens and the termination of any
financing statements relating thereto shall be provided to the Buyer at
Closing.
6.9 No Material Adverse Event. The business and properties of the
Seller shall not have been affected or threatened to be affected by any loss or
damage, whether or not covered by insurance, except to the extent that the same
would not have a material adverse effect on the Seller, the Business or the
Transferred Assets.
6.10 Resolutions. The Seller and CHI shall have delivered to the
Buyer certified copies of resolutions of the board of directors and the
shareholders of the Seller and the board of directors of CHI approving this
Agreement and the transactions contemplated hereby.
6.11 Employment Agreement. At the Closing, the Buyer shall enter
into an employment agreement with each of Todd R. Thomas and Ted M. Wilkes in
the form attached hereto as Exhibits A-1 and A-2, respectively.
6.12 Supply Agreement. At the Closing, the Buyer and CHI shall
enter into a supply agreement (the "Supply Agreement") in the form attached
hereto as Exhibit B.
6.13 License Agreement. At the Closing, the Buyer and CHI, or one
of its Affiliates, shall enter into a license agreement in the form attached
hereto as Exhibit C.
6.14 Representation Agreement. At the Closing, the Buyer and CHI
shall enter into a representation agreement in the form attached hereto as
Exhibit D.
6.15 Repayment of Indebtedness. All Debt Obligations and
Intercompany Obligations of the Seller shall have been repaid in full, and the
Seller and the Shareholders shall have delivered to the Buyer documentation
satisfactory to the Buyer evidencing such repayment and the release of all
Liens and guarantees related thereto. Notwithstanding the foregoing, the
Seller, at its option, may elect to have all or a portion of the Cash Payment
remitted at Closing directly to the Persons to whom such Debt Obligations or
Intercompany Obligations are owed by delivering written notice of such election
to the Buyer at least five Business Days prior to Closing; provided, however,
that if the Seller makes such election, the Seller and the Shareholders shall
not be relieved from their obligation to deliver to the Buyer at Closing
documentation satisfactory to the Buyer evidencing the repayment of all Debt
Obligations and Intercompany Obligations and the release of all Liens and
guarantees related thereto; provided further, however, that the aggregate
amount of any such payments made by the Buyer and the amount paid to the Seller
at Closing shall not exceed $12,000,000.
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6.16 Stock Exchange Approval. The New York Stock Exchange shall
have approved the listing of the Weatherford Shares.
6.17 Approvals for Issuance of Weatherford Shares. Weatherford
shall have received all consents, approvals and other authorizations from
Governmental Entities necessary or appropriate for Weatherford to issue the
Weatherford Shares.
6.18 Assumed Trade Payables. The Buyer shall have received a
schedule of the Assumed Trade Payables.
ARTICLE 7
SELLER'S AND SHAREHOLDERS' CONDITIONS
The obligation of the Seller to transfer the Transferred Assets as
contemplated hereby is, at the option of the Seller and the Shareholders,
subject to the satisfaction on or before the Closing Date of the conditions set
forth below, any of which may be waived by the Seller and the Shareholders in
writing; provided, however, the Seller's and the Shareholders' election to
proceed with the Closing shall not be deemed a waiver of any breach of any
representation, warranty or covenant herein, whether or not known to the Seller
or the Shareholders or existing on the Closing Date, and such action shall not
prejudice the Seller's and the Shareholders' right to recover damages for any
breach.
7.1 Representations and Warranties. The representations and
warranties of the Buyer and Weatherford contained in this Agreement shall be
true, correct and complete in all respects on and as of the Closing Date with
the same force and effect as though such representations and warranties had been
made or given on and as of such date; each and all of the agreements and
covenants of the Buyer and Weatherford to be performed or complied with by them
on or before the Closing Date pursuant to this Agreement shall have been
performed or complied with in all respects; and the Buyer and Weatherford shall
have delivered to the Seller a certificate signed by an authorized officer of
each of Weatherford and the Buyer General Partner, dated the Closing Date,
regarding the matters set forth in this Section 7.1.
7.2 No Litigation. No preliminary or permanent injunction or other
order of any Governmental Entity shall be in effect nor shall there be any
statute, rule, regulation or executive order promulgated or enacted by any
Governmental Entity that, in any such case, prevents the consummation of the
transactions contemplated by this Agreement. No suit, action, claim, proceeding
or investigation before any court or other Governmental Entity shall have been
commenced or threatened by any Person other than the Seller, the Shareholders
or any of their respective Affiliates seeking to prevent the sale of the
Transferred Assets or the Business or asserting that the sale of all or a
portion of the Transferred Assets or the Business would be unlawful.
7.3 Licenses, Consents and Approvals. All necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity shall have been obtained, made, expired
or lapsed and shall be in full force and effect. The Buyer shall have delivered
to the Seller a copy of each of the licenses, consents, approvals and other
authorizations from Governmental Entities necessary or appropriate for the
Buyer to consummate the transactions contemplated by this Agreement.
7.4 Resolutions. The Buyer shall have delivered to the Seller
certified copies of resolutions of the boards of directors of each of
Weatherford and the Buyer General Partner approving this Agreement and the
transactions contemplated hereby.
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7.5 Other Legal Matters. All exhibits, schedules, certificates,
documents and legal matters in connection with this Agreement and the
transactions contemplated hereby shall be in the forms required by this
Agreement.
7.6 Representation Agreement. At the Closing, the Buyer and CHI
shall enter into a representation agreement in the form attached hereto as
Exhibit D.
7.7 Employment Agreement. At the Closing, the Buyer shall enter
into an employment agreement with each of Todd R. Thomas and Ted M. Wilkes in
the form attached hereto as Exhibits A-1 and A-2, respectively.
7.8 Supply Agreement. At the Closing, the Buyer and CHI shall
enter into the Supply Agreement.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification by the Seller and the Shareholders. Except as
otherwise limited by this Article 8 and Article 9 hereof, the Seller and each
of the Shareholders, jointly and severally, agree to indemnify, defend and hold
the Buyer and Weatherford, each of their respective Affiliates and each of
their respective officers, directors, employees, agents, stockholders and
controlling Persons and their respective successors and assigns harmless from
and against and in respect of Damages actually suffered, incurred or realized
by such party (collectively, "Buyer Losses"), arising out of or resulting from
or relating to:
(a) any misrepresentation, breach of warranty or breach
of any covenant or agreement made or undertaken by the Seller or any of the
Shareholders in this Agreement or any misrepresentation in or omission from any
other agreement, certificate, exhibit or writing delivered to the Buyer or
Weatherford pursuant to this Agreement, including the Disclosure Schedule;
(b) any Environmental Liability arising from or
attributable to (i) any condition, event, circumstance, activity, practice,
incident, action or omission existing or occurring prior to the Closing Date
and related in any way to the Transferred Assets or the Business, or (ii) the
use, storage, disposal or treatment, or the transportation for storage,
disposal or treatment, of Hazardous Materials prior to the Closing Date and
related in any way to the Transferred Assets or the Business; or
(c) any Retained Liability.
For purposes of determining the Buyer's and Weatherford's right to
indemnification for a misrepresentation or breach of warranty made by the
Seller or any of the Shareholders in this Agreement, all such representations
and warranties that have been made subject to a materiality qualification shall
be deemed to have been made without that qualification, it being understood
that the threshold provided for in Section 8.9 is intended to be the only
materiality qualification for purposes of indemnification.
8.2 Indemnification by the Buyer and Weatherford. Except as
otherwise limited by this Article 8 and Article 9 hereof, the Buyer and
Weatherford, jointly and severally, agree to indemnify, defend and hold the
Seller and the Shareholders and each of their respective officers, directors,
employees, agents, shareholders and controlling Persons and successors and
assigns harmless from and against and in respect of Damages actually suffered,
incurred or realized by such party (collectively, "Seller Losses"), arising out
of or resulting from or relating to (a) any misrepresentation, breach of
warranty or breach of any covenant or
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agreement made or undertaken by the Buyer or Weatherford in this Agreement or
any misrepresentation in or omission from any other agreement, certificate,
exhibit or writing delivered to the Seller or the Shareholders pursuant to this
Agreement or (b) any Assumed Liabilities.
8.3 Procedure. All claims for indemnification under this Article
8 shall be asserted and resolved as follows:
(a) An Indemnitee shall promptly give the Indemnitor
notice of any matter which an Indemnitee has determined has given or could give
rise to a right of indemnification under this Agreement, stating the amount of
the Losses, if known, and method of computation thereof, all with reasonable
particularity, and stating with particularity the nature of such matter.
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 Indemnitor that could have been actually avoided had such
notice been provided within such required time period.
(b) The obligations and liabilities of an Indemnitor
under this Article 8 with respect to Losses arising from claims of any third
party that are subject to the indemnification provided for in this Article 8
("Third Party Claims") shall be governed by and contingent upon the following
additional terms and conditions: if an Indemnitee shall receive notice of any
Third Party Claim, the Indemnitee shall give the Indemnitor prompt notice of
such Third Party Claim and the Indemnitor may, at its option, assume and
control the defense of such Third Party Claim at the Indemnitor's expense and
through counsel of the Indemnitor's choice reasonably acceptable to Indemnitee.
In the event the Indemnitor assumes the defense against any such Third Party
Claim as provided above, the Indemnitee shall have the right to participate at
its own expense in the defense of such asserted liability, shall cooperate with
the Indemnitor in such defense and will attempt to make available on a
reasonable basis to the Indemnitor all witnesses, pertinent records, materials
and information in its possession or under its control relating thereto as is
reasonably required by the Indemnitor. In the event the Indemnitor does not
elect to conduct the defense against any such Third Party Claim, the Indemnitor
shall pay all reasonable costs and expenses of such defense as incurred and
shall cooperate with the Indemnitee (and be entitled to participate) in such
defense and attempt to make available to it on a reasonable basis all such
witnesses, records, materials and information in its possession or under its
control relating thereto as is reasonably required by the Indemnitee. Except
for the settlement of a Third Party Claim that involves the payment of money
only and for which the Indemnitee is totally indemnified by the Indemnitor, no
Third Party Claim may be settled without the written consent of the Indemnitee.
8.4 Payment. Payment of any amounts due pursuant to this Article 8
shall be made in immediately available funds by wire transfer to a bank account
or accounts to be designated by the Indemnitee within ten Business Days after
notice is sent by the Indemnitee.
8.5 Failure to Pay Indemnification. If and to the extent the
Indemnitee shall make written demand upon the Indemnitor for indemnification
pursuant to this Article 8 and the Indemnitor shall refuse or fail to pay in
full within ten Business Days of such written demand the amounts demanded
pursuant hereto and in accordance herewith, then the Indemnitee may utilize any
legal or equitable remedy to collect from the Indemnitor the amount of its
Losses. Nothing contained herein is intended to limit or constrain the
Indemnitee's rights against the Indemnitor for indemnity, the remedies herein
being cumulative and in addition to all other rights and remedies of the
Indemnitee.
8.6 Right of Offset. The Buyer shall be entitled to offset against
any Additional Payment or the Contingent Payment any amount which it shall be
entitled to recover from the Seller or any of the Shareholders with respect to
any indemnifiable Buyer Losses pursuant to this Article 8. Notwithstanding the
foregoing, if the Buyer, the Seller and the Shareholders do not agree on any
amount that the Buyer is entitled to recover pursuant to this Article 8, the
Buyer shall not entitled to exercise its rights of offset pursuant to this
Section 8.6 until the matter has been resolved by binding arbitration pursuant
to Section 12.4; provided,
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however, that the Buyer shall not be required to make any Additional Payment or
the Contingent Payment until the written decision of the arbitrators with
respect to such matter has been issued.
8.7 Adjustment of Liability. The amount which an Indemnitee shall
be entitled to receive from an Indemnitor with respect to any indemnifiable
Losses under this Article 8 shall be net of any insurance recovery by the
Indemnitee on account of such Losses from an unaffiliated party.
8.8 Express Negligence. THE INDEMNITIES SET FORTH IN THIS ARTICLE
8 ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE
EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING TEXAS' EXPRESS NEGLIGENCE RULE
OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES
BECAUSE OF THE SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR
PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF ANY OF THE INDEMNIFIED PARTIES.
8.9 Indemnification Limitations.
(a) The Sellers and the Shareholders shall be liable
under Section 8.1(a) in respect of a misrepresentation or breach of warranty
only if, and then only to the extent that, the aggregate amount of any Buyer
Losses for which the Buyer is entitled to indemnification pursuant to such
clause exceeds $100,000; provided, however, the Sellers' and the Shareholders'
liability under Section 8.1(a) shall not be so limited if such Buyer Losses
arise from a breach of any of the representations set forth in Sections 2.1,
2.2(a), 2.4(a) - (d)(i) or 2.13.
(b) The aggregate liability of the Sellers and
Shareholders under Section 8.1(a) for Buyer Losses arising from a breach of the
representations and warranties set forth in Sections 2.1, 2.2(a), 2.4(a) -
(d)(i) or 2.13 shall not exceed the sum of the VTC, the Contingent Payment, if
any, and any Additional Payments.
(c) The aggregate liability of the Sellers and
Shareholders under Section 8.1(a) for Buyer Losses arising from a breach of any
representation or warranty other than those set forth in Sections 2.1, 2.2(a),
2.4(a) - (d)(i) or 2.13 shall not exceed $7,500,000. At Closing, Weatherford
shall place fifty percent of the Weatherford Shares (the "Escrow Shares") in an
escrow account, on terms reasonably satisfactory to Weatherford and the Seller,
as security for the indemnification obligations of the Seller and Shareholders
hereunder. All expenses of the escrow shall be borne by the Seller. All
dividends and distributions in respect of the Escrow Shares shall be retained
in such escrow account. The Seller shall have the right to direct the escrow
agent to sell such Weatherford Shares in a Resale provided all the proceeds of
such sale, including any investment grade debt securities purchased from a
reinvestment of the proceeds, are retained in such escrow account. The Escrow
Shares, any dividends or distributions in respect thereof and any proceeds
therefrom shall be held in escrow for a period of two years following the
Closing Date; provided, however, that if the Buyer or Weatherford shall have
made a claim for indemnification pursuant to this Article 8 which has not been
finally resolved by such date, the Escrow Shares, any dividends or
distributions in respect thereof and any proceeds therefrom shall continue to
be held in escrow until all claims have been resolved. Weatherford shall be
entitled to offset against the Escrow Shares, any dividends or distributions in
respect thereof or any proceeds therefrom, any amount which it shall be
entitled to recover from the Seller or any of the Shareholders with respect to
any indemnifiable Buyer Losses pursuant to this Article 8, subject to the
provisions of Section 8.6. Notwithstanding the foregoing, if the Buyer, the
Seller and the Shareholders do not agree on any amount that the Buyer is
entitled to recover pursuant to this Article 8, the Buyer shall not entitled to
exercise its right of offset pursuant to this Section 8.9(c) until the matter
has been resolved by binding
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arbitration pursuant to Section 12.4. Until such time as the Escrow Shares have
been delivered to the Seller pursuant to this Section 8.9(c), the Seller shall
be entitled to vote the Escrow Shares. No interest shall be payable with
respect to the Escrow Shares. All income from the Escrow Shares shall become
part of the Escrow Shares.
(d) The aggregate liability of the Seller and the
Shareholders for Buyer Losses arising from any Pre-Closing Obligation shall not
be limited.
ARTICLE 9
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 the Seller or any of the Shareholders pursuant to this Agreement
shall be deemed representations and warranties of the Seller and the
Shareholders. The several representations and warranties of the parties to this
Agreement shall survive the Closing Date for a period of two years from the
Closing Date (except that the representations and warranties set forth in
Sections 2.1, 2.2(a), 2.4(a) - (d)(i) and 2.13 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 8 hereof may be made thereon) if a written notice asserting the claim
shall have been given within the Survival Period with respect to such matter.
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. The agreements and covenants set forth
herein shall survive without limitation. All representations, warranties,
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 10
TERMINATION
10.1 Termination. The obligation to close the transactions
contemplated by this Agreement may be terminated by:
(a) mutual agreement of the Buyer, Weatherford, the
Seller and the Shareholders;
(b) the Buyer and Weatherford, if a material default
shall be made in the observance or in the due and timely performance by the
Seller or any of the Shareholders of any agreements and covenants of the Seller
and the Shareholders herein contained, or if there shall have been a breach by
the Seller or any of the Shareholders of any of the warranties and
representations of the Seller and the Shareholders herein contained, and such
default or breach has not been cured or has not been waived;
(c) the Seller and the Shareholders, if a material
default shall be made by the Buyer or Weatherford in the observance or in the
due and timely performance by the Buyer or Weatherford of any agreements and
covenants of the Buyer and Weatherford herein contained, or if there shall have
been a breach
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by the Buyer or Weatherford of any of the warranties and representations of the
Buyer and Weatherford herein contained, and such default or breach has not been
cured or has not been waived; or
(d) the Buyer and Weatherford or the Seller and the
Shareholders (provided the terminating parties have not materially breached any
of their agreements, covenants or representations and warranties) if the
Closing shall not have occurred on or before May 30, 1999.
10.2 Liability Upon Termination. If the obligation to close the
transactions contemplated by this Agreement is terminated pursuant to any
provision of Section 10.1, then this Agreement shall forthwith become void and
there shall not be any liability or obligation with respect to the terminated
provisions of this Agreement on the part of the Seller, the Shareholders, the
Buyer or Weatherford except and to the extent such termination results from the
willful breach by a party of any of its representations, warranties or
agreements hereunder and except that the termination of this Agreement shall
not relieve any party of its obligations under Section 5.1(b), Article 8 (but
only to the extent it applies to breaches of the warranties made in Section
2.13 and Section 3.3), Section 12.2 and Section 12.7.
10.3 Notice of Termination. The parties hereto may exercise their
respective rights of termination under Section 10.1 only by delivering written
notice to that effect to the other party or parties, and such notice is
received on or before the Closing Date.
ARTICLE 11
DEFINITIONS OF CERTAIN TERMS
In addition to terms defined elsewhere in this Agreement, the
following terms shall have the meanings assigned to them herein, unless the
context otherwise indicates, both for purposes of this Agreement and all
exhibits hereto and the Disclosure Schedule:
11.1 "Accounts Receivable" shall mean all accounts and notes
receivable relating to the Business.
11.2 "Additional Payment" shall have the meaning given such term i
Section 1.6 hereof.
11.3 "Adjusted Gross Margin Per Commissioned Compressor" shall have
the meaning given such term in Section 1.7(c) hereof.
11.4 "Affiliate" shall mean, with respect to any specified Person,
a Person that, directly or indirectly, controls, is controlled by or is under
common control with such specified Person.
11.5 "Affiliated Company" shall mean Clearwater, Inc., a
Pennsylvania corporation.
11.6 "Agreement" shall mean this Asset Purchase Agreement among
the Seller, the Shareholders, the Buyer and Weatherford, as amended from time
to time by the parties hereto, including the exhibits hereto and the Disclosure
Schedule.
11.7 "Assumed Liabilities" shall have the meaning given such term
in Section 1.4(d) hereof.
11.8 "Assumed Trade Payables" shall have the meaning given such
term in Section 1.4(c) hereof.
11.9 "Available for Use" shall mean the completion of commission
(i.e., field testing and certification for use) of a compressor, excluding any
compressors that are manufactured for the Project except to the extent that
such compressors are actively marketed and ultimately placed in service.
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11.10 "Average Closing Price" shall have the meaning given such term
in Section 11.98 hereof.
11.11 "Average Number of Commissioned Compressors" shall have the
meaning given such term in Section 1.7(c) hereof.
11.12 "Business" shall mean the design, manufacture, sale,
distribution and service of compressors, chemicals and software for use in
underbalanced drilling applications and the provision of services and
engineering activities related thereto as conducted or proposed to be conducted
by the Seller.
11.13 "Business Day" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in Houston, Texas are authorized
by law to close.
11.14 "Buyer" shall mean Weatherford U.S., L.P., a Louisiana limited
partnership, or one or more of its designees.
11.15 "Buyer General Partner" shall mean Weatherford Holding U.S.,
Inc., a Delaware corporation and the general partner of the Buyer.
11.16 "Buyer Losses" shall have the meaning given such term in
Section 8.1 hereof.
11.17 "Capital Expenditures" shall have the meaning given such term
in Section 1.7(c) hereof.
11.18 "Cash Payment" shall have the meaning given such term in
Section 1.4 hereof.
11.19 "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq.
11.20 "CHI" shall mean Clearwater Holdings, Inc., a Delaware
corporation.
11.21 "CHI Shareholders" shall mean Todd R. Thomas, Kevin W. Smith,
Ted M. Wilkes and James G. Wilkes, collectively.
11.22 "Closing" shall mean the transfer by the Seller to the Buyer
of the Transferred Assets, the assumption by the Buyer of the Assumed
Liabilities and the transfer by the Buyer to the Seller of the Purchase Price.
11.23 "Closing Date" shall have the meaning given such term in
Section 1.3 hereof.
11.24 "Closing Date Working Capital" shall mean the aggregate amount
of (a) all current assets reflected on the Closing Statement less (b) all
current liabilities reflected on the Closing Statement .
11.25 "Closing Statement" shall have the meaning given such term in
Section 1.5(a) hereof.
11.26 "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended from time to time.
11.27 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or similar provisions of legislation replacing such
law from time to time.
11.28 "Commission" shall mean the United States Securities and
Exchange Commission.
11.29 "Common Stock" shall mean the common stock, par value $1.00
per share, of Weatherford.
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11.30 "Contingent Payment" shall have the meaning given such term
in Section 1.7(a) hereof.
11.31 "Contingent Payment Date" shall meaning the last day of the
Performance Period.
11.32 "Contingent Payment Statement" shall have the meaning given
such term in Section 1.7(d) hereof.
11.33 "Damages" shall mean any and all liabilities, losses, damages,
demands, assessments, claims, costs and expenses (including interest, awards,
judgments, penalties, settlements, fines, costs of remediation, diminutions in
value, costs and expenses incurred in connection with investigating and
defending any claims or causes of action (including, without limitation,
attorneys' fees and expenses and all fees and expenses of consultants and other
professionals)).
11.34 "Debt Obligations" shall mean any contract, agreement,
indenture, note or other instrument relating to the borrowing of money or any
guarantee or other contingent liability in respect of any indebtedness or
obligation of any Person, including, without limitation, the carry value of all
capital leases and all non-current liabilities, including deferred income taxes
(other than the endorsement of negotiable instruments for deposit or collection
in the ordinary course of business).
11.35 "Disclosure Schedule" shall mean the disclosure schedule of
even date delivered to the Buyer and Weatherford. The Disclosure Schedule is a
part of this Agreement.
11.36 "Documents and Other Papers" shall mean and include any
document, agreement, instrument, certificate, writing, notice, consent,
affidavit, letter, telegram, telex, statement, file, computer disk, microfiche
or other document in electronic format, schedule, exhibit or any other paper or
record whatsoever.
11.37 "Entitlements" shall have the meaning given such term in
Section 1.1(a)(vi) hereof.
11.38 "Environmental Laws" shall mean all national, federal, state,
provincial, municipal or local laws, rules, regulations, statutes, ordinances
or orders of any Governmental Entity relating to (a) the control of any
potential pollutant or protection of the air, water or land, (b) solid, gaseous
or liquid waste generation, handling, treatment, storage, disposal or
transportation and (c) the regulation of or exposure to hazardous, toxic or
other substances alleged to be harmful.
11.39 "Environmental Liabilities" shall mean any and all Damages
(including any remedial, removal, response, abatement, clean-up, investigation
and/or monitoring costs and associated legal costs) incurred or imposed (a)
pursuant to any agreement, order, notice of responsibility, directive
(including directives embodied in Environmental Laws), injunctions, 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 any other Person for personal injury, property damage, damage to
natural resources, remediation, or payment or reimbursement of response costs
incurred or expended by such Governmental Entity or other Person pursuant to
common law or statute and related to the use or release of Hazardous Materials.
11.40 "Environmental Permits" shall mean any permit, license,
approval, registration, identification number or other authorization with
respect to the Seller under any Environmental Law.
11.41 "Equipment" shall mean all machinery, transportation equipment,
tools, equipment, furnishings and fixtures owned, leased or subject to a
contract of purchase and sale, or lease commitment that is used in the Business
as operated by the Seller.
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11.42 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
11.43 "Excluded Assets" shall have the meaning given such term in
Section 1.2 hereof.
11.44 "Financial Statements" shall have the meaning given such term
in Section 2.6 hereof.
11.45 "Final Value" shall have the meaning given such term in
Section 1.7(b) hereof.
11.46 "GAAP" shall have the meaning given such term in Section 2.6
hereof.
11.47 "Governmental Entity" shall mean any arbitrator, court,
administrative or regulatory agency, commission, department, board or bureau or
body or other government or authority or instrumentality or any entity or
Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
11.48 "Hazardous Materials" shall mean (a) any substance or material
that is listed, defined or otherwise designated as a "hazardous substance"
under Section 101(14) of CERCLA, (b) any petroleum or petroleum products, (c)
radioactive materials, urea formaldehyde, asbestos and PCBs and (d) any other
chemical, substance or waste that is regulated by any Governmental Entity under
any Environmental Law.
11.49 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
11.50 "HSR Documents" shall have the meaning given such term in
Section 5.11(b) hereof.
11.51 "HSR Parties" shall have the meaning given such term in
Section 5.11(a) hereof.
11.52 "Indemnitee" shall mean the Person or Persons indemnified, or
entitled, or claiming to be entitled to be indemnified, pursuant to the
provisions of Section 8.1 or Section 8.2 hereof, as the case may be.
11.53 "Intercompany Obligation" means any obligation, fixed or
contingent, of the Seller or the Shareholders to any officer, director,
shareholder or Affiliate of any of the Seller or the Shareholders or of such
officer, director, shareholder or Affiliate to any of the Seller or the
Shareholders, including without limitation any Debt Obligation owed to or with
any such Person.
11.54 "Indemnitor" shall mean the Person or Persons having the
obligation to indemnify pursuant to the provisions of Section 8.1 or Section
8.2 hereof, as the case may be.
11.55 "Inventories" shall mean all inventories of finished goods,
tooling inventory, work in progress and raw materials relating to the Business,
wherever situated.
11.56 "Lien" shall mean any lien, pledge, claim, charge, security
interest or other encumbrance, option, defect or other rights of any third
Person of any nature whatsoever.
11.57 "Losses" shall mean Seller Losses or Buyer Losses, as the case
may be.
11.58 "Names" shall have the meaning given such term in Section 5.9
hereof.
11.59 "Net Revenues" shall mean gross revenues received by the Buyer
less Taxes, insurance, delivery charges, returns, allowances, rebates and
similar customer allowances and third party pass-through charges.
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<PAGE> 41
11.60 "Performance Period" shall mean the period ending on the last
day of the 24-month period commencing on the first day of the first monthly
accounting period following the Closing Date.
11.61 "Permitted Liens" shall mean (i) Liens set forth in Section
11.61 of the Disclosure Schedule securing any of the Assumed Liabilities, (ii)
inchoate mechanic or materialmen Liens for construction in progress, (iii)
inchoate workmen, repairmen, warehousemen and carriers Liens arising in the
ordinary course of business, (iv) encumbrances consisting of zoning
restrictions on the use of the Real Property, none of which materially impairs
the use of such property and (v) Liens currently securing Debt Obligations of
the Seller, which Liens will be satisfied and released of the Closing Date;
provided, however, that the Liens described in clauses (ii) and (iii) shall not
be considered Permitted Liens as of the Closing Date.
11.62 "Person" shall mean a corporation, an association, a
partnership, an organization, a business, an individual or a Governmental
Entity.
11.63 "Pre-Closing Obligations" shall mean all liabilities, debts
and obligations of any of the Seller or any of the Shareholders (including
indemnification and other contingent obligations) relating to (i) acts, events
or omissions by any Person or circumstances existing at or prior to the
Closing, (ii) goods or services provided to or for the benefit of the Seller or
any of its Affiliates prior to the Closing, (iii) goods or services
manufactured or provided by or on behalf of the Seller or any of its Affiliates
or licensees prior to the Closing, (iv) any pending or threatened litigation,
claims or disputes made or threatened prior to the Closing, (v) any Retained
Liabilities, (vi) the conduct of the Business, the ownership or operation of
the Transferred Assets or any benefit realized by the Seller prior to the
Closing, (vii) any Excluded Assets, (viii) Debt Obligations of the Seller,
other than the Assumed Liabilities which shall be assumed by the Buyer on the
Closing Date, (ix) the employees of the Seller under any contracts, agreements,
arrangements or understandings with such employees entered into or existing at
or prior to the Closing and all other obligations of the Seller or any of its
Affiliates with respect to their employees at or prior to the Closing, (x) any
obligations with respect to the Seller Retained Employees, (xi) use of the
Proprietary Information, (xii) Taxes, (xiii) any obligations under any
contracts or agreements that were required to be listed in Section 2.5 of the
Disclosure Schedule but were not and (xiv) any liabilities that were not fully
accrued for and reflected on the Closing Statement.
11.64 "Project" shall have the meaning given such term in Section
5.13 hereof.
11.65 "Projected Performance" shall have the meaning given such term
in Section 1.7(c) hereof.
11.66 "Proprietary Information" shall mean collectively (a) the items
set forth in Section 1.1(a)(iv) of the Disclosure Schedule, (b) Proprietary
Rights and (c) any and all other information and material proprietary to the
Seller, owned, possessed or used by the Seller, whether or not such information
is embodied in writing or other physical form, and which is not generally known
to the public, that (i) relates to financial information regarding the Seller
or the Business, including, without limitation, (y) business plans and (z)
sales, financing, pricing and marketing procedures or methods of the Seller or
(ii) relates to specific business matters concerning the Seller, including,
without limitation, the identity of or other information regarding sales
personnel or customers of the Seller.
11.67 "Proprietary Rights" shall mean all rights to the Names and any
derivations thereof, and all patents, including the patents set forth on
Section 1.1(a)(iv) of the Disclosure Schedule, any patent rights, inventions,
shop rights, know how, trade secrets, designs, drawings, art work, plans,
prints, manuals, models, design registrations, inventor's certificates,
technical information and data, copyrightable works, lists of materials,
patterns, molds, records, diagrams, formulae, product design standards, tools,
die, jigs, models, prototypes, product information literature, computer files,
computer software, hard copy files, catalogs, specifications, confidentiality
agreements, confidential information and other proprietary technology and
similar information; all registered and unregistered trademarks, service marks,
logos, trade names and all
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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.
11.68 "Purchase Price" shall have the meaning given such term in
Section 1.4 hereof.
11.69 "Real Property" shall mean all real property, or any interest
therein, that is used in the Business.
11.70 "Registration Expenses" shall have the meaning given such term
in Section 4.2(e) hereof.
11.71 "Registration Statement" shall have the meaning given such
term in Section 4.1(a) hereof.
11.72 "Representative" shall have the meaning given such term in
Section 12.1 hereof.
11.73 "Required Consents" shall have the meaning given such term in
Section 2.2(b) hereof.
11.74 "Resale" shall have the meaning given such term in Section 1.6
hereof.
11.75 "Retained Liabilities" shall have the meaning given such term
in Section 1.8 hereof.
11.76 "Saipem" shall have the meaning given such term in Section
5.13 hereof.
11.77 "Saipem Contract" shall have the meaning given such term in
Section 5.13 hereof.
11.78 "SEC Documents" shall mean Weatherford's (a) Annual Report on
Form 10-K for the year ended December 31, 1997, as amended by Amendment No. 1
and Amendment No. 2 to the Annual Report on Form 10-K on Form 10-K/A, (b)
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June 30,
1998, and September 30, 1998, (c) Current Reports on Form 8-K dated May 1,
1997, as amended on January 14, 1998, Form 8-K dated November 5, 1997, as
amended on March 26, 1998, Form 8-K dated December 2, 1997, as amended by
Amendment on February 13, 1998, Form 8-K dated January 28, 1998, Form 8-K dated
February 3, 1998, Form 8-K dated February 19, 1998, as amended on April 21,
1998, Form 8-K dated March 5, 1998, as amended on March 9, 1998, Form 8-K dated
April 20, 1998, Form 8-K dated April 22, 1998, as amended on April 24, 1998,
Form 8-K dated May 15, 1998, as amended on May 22, 1998, Form 8-K dated May 27,
1998, Form 8-K dated June 15, 1998, as amended on July 20, 1998, and as amended
on December 10, 1998, Form 8-K dated July 16, 1998, Form 8-K dated August 17,
1998, Form 8-K dated October 22, 1998, Form 8-K dated February 4, 1999, and
Form 8-K dated February 18, 1999 and (d) proxy statement with respect to the
Annual Meeting of Stockholders held on September 21, 1998.
11.79 "Securities Act" shall mean the Securities Act of 1933, as
amended.
11.80 "Seller" shall mean ECD/Northwest, Inc., a Delaware
corporation.
11.81 "Seller Group" shall mean (a) the Seller, (b) any of the
Shareholders who receives any of the Weatherford Shares from the Seller in a
distribution permitted under the Securities Act and (c)Argosy Investment
Partners, L.P., a Pennsylvania limited partnership, North Atlantic Venture Fund
II, L.P., a Delaware limited partnership, James E. Wilkes or up to three key
employees of the Seller or its Affiliates to whom the Seller transfers any of
the Weatherford Shares, provided that the Buyer and Weatherford receive an
opinion of counsel reasonably satisfactory to the Buyer and Weatherford to the
effect that registration under the Securities Act or any applicable state
securities laws is not required for such transfer and such Persons shall have
entered into an agreement reasonably acceptable to Weatherford whereby they
agree to be bound by the provisions of this Agreement as it relates to the
members of the Seller Group.
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11.82 "Seller Losses" shall have the meaning given such term in
Section 8.2 hereof.
11.83 "Seller Retained Employees" shall have the meaning given such
term in Section 5.10(a) hereof.
11.84 "Selling Expenses" shall have the meaning given such term in
Section 4.2(e) hereof.
11.85 "Services" shall mean the products and services historically
provided by the Seller to its customers in connection with the Business, which
include the products and services set forth in Section 11.85 of the Disclosure
Schedule to the extent such products and services were historically provided in
connection with underbalanced drilling services. Services shall not include any
rental of motors.
11.86 "Shareholders" shall mean CHI and the CHI Shareholders,
collectively.
11.87 "Supply Agreement" shall have the meaning given such term in
Section 6.12 hereof.
11.88 "Target Price" shall mean $15,000,000 divided by the number of
Weatherford Shares issued to the Seller at the Closing.
11.89 "Target Working Capital" shall mean $700,000.
11.90 "Taxes" shall mean all federal, state, local, foreign and other
taxes, charges, fees, duties, levies, imposts, customs or other assessments,
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, profit share, license,
lease, service, service use, value added, withholding, payroll, employment,
excise, estimated, severance, stamp, occupation, premium, property, windfall
profits, or other taxes, fees, assessments, customs, duties, levies, imposts,
or charges of any kind whatsoever, together with any interests, penalties,
additions to tax, fines or other additional amounts imposed thereon or related
thereto, and the term "Tax" means any one of the foregoing Taxes.
11.91 "Tax Returns" shall mean all returns, declarations, reports,
statements and other documents of, relating to, or required to be filed in
respect of, any and all Taxes, and the term "Tax Return" means any one of the
foregoing Tax Returns.
11.92 "Third Party Claims" shall have the meaning given such term
in Section 8.3(b) hereof.
11.93 "Trade Payables" shall mean those obligations of the Seller
relating to the provision of goods and services to the Seller for the conduct
of the Business in the ordinary course of business of the Seller that relate to
the Transferred Assets and that are classified as Trade Payables in accordance
with GAAP.
11.94 "Transferred Assets" shall have the meaning given such term
in Section 1.1(a) hereof.
11.95 "US$", "dollar" or "$" shall mean United States dollars.
11.96 "VTC" shall mean the total consideration received by the Seller
at Closing, which shall be calculated as the sum of (a) the Cash Payment, (b)
the closing sales price of the Common Stock on the Contingent Payment Date, as
reported by the New York Stock Exchange, multiplied by the number of
Weatherford Shares issued to the Seller at Closing and (c) the value as of the
Closing Date of any other securities, assets or property that is received or
will be received by a holder of a share of Common Stock during the Performance
Period in respect of the Common Stock, assuming such securities, assets or
property are not disposed of by the Seller Group (the value of such securities,
assets or property to be determined as set forth in Section 1.12).
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11.97 "Weatherford" shall mean Weatherford International, Inc., a
Delaware corporation.
11.98 "Weatherford Shares" shall mean 550,000 shares of Common Stock;
provided, however, that if the average of the closing sales price per share of
the Common Stock for the five consecutive trading days ending on the third
Business Day immediately preceding the Closing Date, as reported by the New
York Stock Exchange (the "Average Closing Price"), is (i) less than $19.00, the
Weatherford Shares shall mean the number of shares of Common Stock equal to
$10,450,000 divided by the Average Closing Price, or (ii) more than $22.50, the
Weatherford Shares shall mean the number of shares of Common Stock equal to
$12,375,000 divided by the Average Closing Price.
ARTICLE 12
MISCELLANEOUS
12.1 Representative. The Seller, the Seller Group and each of the
Shareholders hereby irrevocably appoints Kevin W. Smith and Patrick D. Dugan to
be the representative (the "Representative") of the Seller and the Shareholders
following the Closing Date in any matter arising out of this Agreement. For any
matter in which the Buyer is entitled to rely on or otherwise deal with the
Seller, the Seller Group or any of the Shareholders, the Buyer shall be
entitled to communicate solely with the Representative and shall be entitled to
rely on any such communications as being the desire and will of the Seller and
the Shareholders. Notice delivered to the Representative in accordance with
Section 12.4 hereof shall be deemed notice to the Seller and each of the
Shareholders.
12.2 Expenses. Except as otherwise set forth herein, and whether or
not the transactions contemplated by this Agreement shall be consummated, each
party agrees to pay, without right of reimbursement from any other party, the
costs incurred by such party incident to the preparation and execution of this
Agreement and performance of its obligations hereunder, including without
limitation the fees and disbursements of legal counsel, accountants and
consultants employed by such party in connection with the transactions
contemplated by this Agreement. Notwithstanding the foregoing, the parties
agree that all filing fees in connection with premerger notification and report
form filings required under the HSR Act shall be borne equally by the Buyer and
Weatherford, on the one hand, and the Seller and the Shareholders, on the other
hand.
12.3 Notices. All notices, requests, consents, directions and other
instruments and communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered in person, by courier, by overnight delivery service with proof of
delivery or by prepaid registered or certified United States first-class mail,
return receipt requested, addressed to the respective party at the address set
forth below, or if sent by facsimile or other similar form of communication
(with receipt confirmed) to the respective party at the facsimile number set
forth below:
If to the Seller, the Shareholders or the Representative, to:
Clearwater Holdings, Inc.
5605 Grand Avenue
Pittsburgh, PA 15225
Attention: Patrick D. Dugan
Facsimile: (412) 264-1616
Confirm: (412) 264-1100
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and
Kevin W. Smith
103 Fairway Road
McMurray, PA 15317
and
Todd R. Thomas
2 Bough Leaf Place
The Woodlands, TX 77381
and
Ted M. Wilkes
1970 Duncan Avenue
Allison Park, PA 15101
and
James E. Wilkes
1053 Greensview Drive
Wooster, OH 44691
Copies to:
Houston Harbaugh, P.C.
12th Floor, Two Chatham Center
Pittsburgh, PA 15219
Attention: Thomas J. Miller
Facsimile: (412) 281-4499
Confirm: (412) 288-1847
If to the Buyer or Weatherford, to:
Weatherford U.S., L.P.
515 Post Oak Blvd, Suite 600
Houston, Texas 77027
Attention: Curtis W. Huff
Facsimile: (713) 297-8488
Confirm: (713) 297-8456
or to such other address or facsimile number and to the attention of such other
Person(s) as either party may designate by written notice. Any notice mailed
shall be deemed to have been given and received on the third Business Day
following the day of mailing.
12.4 Arbitration. Except as otherwise provided herein, in the event
there shall exist any dispute or controversy with respect to this Agreement or
any matter relating hereto or the transactions contemplated hereby, including,
but not limited to Article 8, the parties hereto agree to seek to resolve such
dispute or controversy by mutual agreement. If the parties hereto are unable to
resolve such dispute or controversy by agreement within 60 days following
notice by any party hereto of the nature of such dispute or controversy setting
forth in reasonable detail the circumstances and basis of such dispute or
controversy, the parties agree
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that such dispute or controversy be resolved by binding arbitration pursuant to
the provisions of this Section 12.4 and in accordance with the then current
Commercial Arbitration Rules of the American Arbitration Association. All
arbitration proceedings shall be held in Houston, Texas. 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 provide written
notice to the electing party naming 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 and shall be independent and not affiliated with any of the
parties hereto. The arbitrators shall resolve all disputes in controversy in
accordance with Texas substantive law. All statutes of limitations that would
otherwise be applicable shall apply to any arbitration proceeding. The
arbitrators appointed pursuant to this Section 12.4 shall promptly hear and
determine (after due notice and hearing and giving the parties reasonable
opportunity to be heard) the questions submitted, and shall render their
decision within 60 days after appointment of the third arbitrator or as soon as
practical thereafter. If within such period a decision is not rendered by the
board or a majority thereof, new arbitrators may be named and shall act
hereunder at the election of either party in like manner as if none had
previously been named. The decision of the arbitrators, or a majority thereof,
made in writing, shall absent manifest error be final and binding upon the
parties hereto as to the questions submitted, and each party shall abide by
such decision.
12.5 Successors. Except as specifically contemplated by this
Agreement, no party hereto shall assign this Agreement or any part hereof
without the prior written consent of the other parties; provided, however, the
Buyer may assign its rights and obligations in this Agreement to an Affiliate
of the Buyer. This Agreement shall inure to the benefit of, be binding upon and
be enforceable by the parties hereto and their respective successors and
assigns.
12.6 Entire Agreement. This Agreement and the exhibits hereto and
the Disclosure Schedule constitute the entire agreement and understanding
between the parties relating to the subject matter hereof and thereof and
supersedes all prior representations, endorsements, premises, agreements,
memoranda communications, negotiations, discussions, understandings and
arrangements, whether oral, written or inferred, between the parties relating
to the subject matter hereof. This Agreement may not be modified, amended,
rescinded, canceled, altered or supplemented, in whole or in part, except upon
the execution and delivery of a written instrument executed by a duly
authorized representative of each of the parties hereto.
12.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
TEXAS WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES.
12.8 Waiver. The waiver of any breach of any term or condition of
this Agreement shall not be deemed to constitute the waiver of any other breach
of the same or any other term or condition.
12.9 Severability. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.10 No Third Party Beneficiaries. Any agreement contained,
expressed or implied in this Agreement shall be only for the benefit of the
parties hereto and their respective legal representatives, successors and
assigns, and such agreements shall not inure to the benefit of the obligees of
any indebtedness of any party hereto, it being the intention of the parties
hereto that no Person shall be deemed a third party beneficiary of this
Agreement, except to the extent a third party is expressly given rights herein.
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12.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.12 Headings. Each statement set forth in the Disclosure Schedule
with respect to a particular section herein shall be deemed made solely with
respect to such section and not with respect to any other section hereof unless
specifically set forth in the Disclosure Schedule as also being made with
respect to such other section. The headings of the Articles and Sections of
this Agreement have been inserted for convenience of reference only and shall
in no way restrict or otherwise modify any of the terms or provisions hereof or
affect in any way the meaning or interpretation of this Agreement.
12.13 Negotiated Transaction. The provisions of this Agreement were
negotiated by the parties hereto, and this Agreement shall be deemed to have
been drafted by all of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
SELLER:
ECD/NORTHWEST, INC.
By: /s/ TODD R. THOMAS
-------------------------------------
Todd R. Thomas
President
SHAREHOLDERS:
CLEARWATER HOLDINGS, INC.
By: /s/ TODD R. THOMAS
-------------------------------------
Todd R. Thomas
President
/s/ TODD R. THOMAS
-----------------------------------------
Todd R. Thomas
/s/ KEVIN W. SMITH
-----------------------------------------
Kevin W. Smith
/s/ TED M. WILKES
-----------------------------------------
Ted M. Wilkes
/s/ JAMES E. WILKES
-----------------------------------------
James E. Wilkes
BUYER:
WEATHERFORD U.S., L.P.
By: Weatherford Holding U.S., Inc., as
General Partner
By: /s/ CURTIS W. HUFF
-----------------------------------------
Curtis W. Huff
Senior Vice President
WEATHERFORD:
WEATHERFORD INTERNATIONAL, INC.
By:/s/ CURTIS W. HUFF
-----------------------------------------
Curtis W. Huff
Senior Vice President
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EXHIBIT 4.20
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ASSET PURCHASE AGREEMENT
BY AND AMONG
TEXAS PIPE WORKS, INC.,
MARK BLANKS, JR.,
GRANT PRIDECO, INC.
AND
WEATHERFORD INTERNATIONAL, INC.
MAY 17, 1999
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TABLE OF CONTENTS
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ARTICLE 1
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PURCHASE AND SALE OF ASSETS.......................................................................................1
1.1 Transferred Assets...............................................................................1
1.2 Closing..........................................................................................2
1.3 Purchase Price...................................................................................2
1.4 Liabilities Not Assumed by the Buyer.............................................................2
1.5 Transfer Taxes; Recording Fees...................................................................2
1.6 Allocation of Purchase Price.....................................................................2
1.7 Prorations of Certain Expenses and Property Taxes................................................2
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SHAREHOLDER..................................................3
2.1 Corporate Matters................................................................................3
2.2 Validity of Agreement and Conflict with Other Instruments........................................3
2.3 Approvals, Licenses and Authorizations...........................................................3
2.4 Title to and Condition of Properties.............................................................4
2.5 Contracts and Commitments........................................................................4
2.6 Taxes............................................................................................5
2.7 No Litigation....................................................................................5
2.8 Warranties and Product Liability.................................................................5
2.9 Finder's Fees....................................................................................5
2.10 Insurance........................................................................................6
2.11 Securities Law Matters...........................................................................6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND WEATHERFORD.......................................................7
3.1 Corporate Matters................................................................................7
3.2 Approvals, Licenses and Authorizations...........................................................7
3.3 Authorization for the Weatherford Shares.........................................................8
3.4 SEC Documents....................................................................................8
ARTICLE 4
REGISTRATION RIGHTS...............................................................................................8
4.1 Registration Rights..............................................................................8
4.2 Procedure........................................................................................9
4.3 Indemnification.................................................................................10
4.4 Termination.....................................................................................11
ARTICLE 5
ADDITIONAL AGREEMENTS............................................................................................11
5.1 Access to Information...........................................................................11
5.2 Storage of Transferred Assets...................................................................12
5.3 Inventory, Orders and Orders in Production......................................................12
5.4 Conduct of the Seller's Business................................................................12
5.5 Negotiation with Others.........................................................................13
5.6 Information.....................................................................................14
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5.7 Delivery of Business Documents..................................................................14
5.8 Further Assurances..............................................................................14
5.9 Covenant Not to Compete With its Business.......................................................14
5.10 Employee Matters. .............................................................................15
ARTICLE 6
BUYER'S AND WEATHERFORD'S CONDITIONS.............................................................................15
6.1 Representations, Warranties and Covenants.......................................................15
6.2 Good Standing...................................................................................15
6.3 Instruments of Transfer.........................................................................15
6.4 No Litigation...................................................................................15
6.5 Licenses, Consents and Approvals................................................................16
6.6 Consents and Release of Liens...................................................................16
6.7 Resolutions.....................................................................................16
6.8 Weatherford Share Price.........................................................................16
6.9 Schedule of Orders and Orders in Production.....................................................16
ARTICLE 7
SELLER'S AND SHAREHOLDER'S CONDITIONS............................................................................16
7.1 Representations and Warranties..................................................................16
7.2 No Litigation...................................................................................16
7.3 Resolutions.....................................................................................17
ARTICLE 8
INDEMNIFICATION..................................................................................................17
8.1 Indemnification by the Seller and the Shareholder...............................................17
8.2 Indemnification by the Buyer and Weatherford....................................................17
8.3 Procedure.......................................................................................17
8.4 Payment.........................................................................................18
8.5 Failure to Pay Indemnification..................................................................18
8.6 Adjustment of Liability.........................................................................18
8.7 Express Negligence..............................................................................18
ARTICLE 9
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS..............................................................19
ARTICLE 10
TERMINATION......................................................................................................19
10.1 Termination.....................................................................................19
10.2 Liability Upon Termination......................................................................20
10.3 Notice of Termination...........................................................................20
ARTICLE 11
DEFINITIONS OF CERTAIN TERMS.....................................................................................20
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ARTICLE 12
MISCELLANEOUS....................................................................................................23
12.1 Spousal Consent.................................................................................23
12.2 Expenses........................................................................................23
12.3 Notices.........................................................................................23
12.4 Arbitration.....................................................................................24
12.5 Successors......................................................................................25
12.6 Entire Agreement................................................................................25
12.7 Governing Law...................................................................................25
12.8 Waiver..........................................................................................25
12.9 Severability....................................................................................25
12.10 No Third Party Beneficiaries....................................................................25
12.11 Counterparts....................................................................................25
12.12 Headings........................................................................................25
12.13 Negotiated Transaction..........................................................................25
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LIST OF DISCLOSURE SCHEDULES
Section 1.1 - Transferred Assets
Section 2.5 - Contracts and Commitments
Section 2.7 - Litigation
Section 2.8 - Product Warranties
Section 2.10 - Insurance
EXHIBITS
Exhibit A - Form of Inventory Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered
into as of May 17, 1999, by and among Texas Pipe Works, Inc., a Texas
corporation (the "Seller"), Mark Blanks, Jr., the sole shareholder of the
Seller (the "Shareholder"), Grant Prideco, Inc., a Delaware corporation (the
"Buyer"), and Weatherford International, Inc., a Delaware corporation
("Weatherford").
WITNESSETH:
WHEREAS, the Seller desires to transfer to the Buyer the Transferred
Assets, and the Buyer desires to acquire such Transferred Assets, all upon the
terms and subject to the conditions set forth herein; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and agreements, all as more fully set forth below.
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Transferred Assets.
(a) Subject to the terms and conditions of this Agreement and
in consideration of the obligations of the Buyer herein, at the Closing, the
Seller shall sell, assign, transfer, grant, bargain, deliver and convey to the
Buyer, free and clear of all Liens, the Seller's entire right, title and
interest in and to the machinery and equipment listed in Section 1.1 of the
Disclosure Schedule (the "Transferred Assets"). Nothing herein shall be deemed
to be a sale or conveyance, or an agreement to sell or convey, any assets of
the Seller except for the Transferred Assets. The Seller also shall assign all
orders from customers relating to oilfield couplings as of the Closing Date
that are not yet in production as of the Closing Date (the "Orders") to an
Affiliate of the Buyer pursuant to Section 5.3 hereof. The Seller agrees that
all orders from customers relating to oilfield couplings as of the Closing Date
that are in production as of the Closing Date (the "Orders in Production")
shall be completed by the Seller within 20 days of the Closing Date. Any Orders
in Production that are not completed within such 20-day period shall be deemed
to be "Orders" and shall be transferred pursuant to the Inventory Agreement.
(b) The Seller shall use its best efforts to obtain such
consents of third parties as are necessary for the assignment of the
Transferred Assets. To the extent that any of the Transferred Assets are not
assignable by the terms thereof or consents to the assignment thereof cannot be
obtained as provided herein, the Transferred Assets shall be held by the Seller
in trust for the Buyer and shall be performed by the Buyer in the name of the
Seller and all benefits and obligations derived thereunder shall be for the
account of the Buyer; provided, however, that where entitlement of the Buyer to
such Transferred Assets hereunder is not recognized by any third party, the
Seller shall, at the request of the Buyer, enforce in a reasonable manner, at
the cost of and for the account of the Buyer, any and all rights of the Seller
against such third party.
(c) On or prior to the Closing Date, the Seller shall notify
each Person which may have possession of any of the Transferred Assets at the
Closing Date, whether by consignment or otherwise, of the transfer of such
Transferred Assets to the Buyer.
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1.2 Closing. Subject to the conditions set forth in this Agreement,
the closing shall take place at the offices of the Buyer, 515 Post Oak Blvd.,
Suite 600, Houston, Texas, at 9:00 a.m. on May 27, 1999, or at such other time,
date or place as the parties hereto shall mutually agree upon in writing (the
"Closing Date"). Failure to consummate the transactions contemplated hereby on
such date shall not result in a termination of this Agreement or relieve any
party hereto of any obligation hereunder unless otherwise terminated in
accordance with Article 10 of this Agreement. Title to, ownership of, control
over and risk of loss of the Transferred Assets shall pass to the Buyer at the
Closing.
1.3 Purchase Price. In consideration of the transfer to the Buyer of
the Transferred Assets and the other covenants of the Seller contained herein,
the Buyer shall, on the Closing Date, pay to the Seller, or to any Person
designated by the Seller on the Seller's behalf, an aggregate amount equal to
$980,000 in immediately available funds by wire transfer to a bank account or
accounts to be designated by the Seller (the "Cash Payment"). In consideration
of the covenants of the Shareholder contained in Section 5.9, the Buyer shall,
on the Closing Date, cause Weatherford to issue to the Shareholder the
Weatherford Shares. The Cash Payment and the Weatherford Shares are herein
collectively referred to as the "Purchase Price".
1.4 Liabilities Not Assumed by the Buyer. The Seller shall pay and
discharge in due course all liabilities, debts and obligations relating to the
Seller and the Transferred Assets, whether known or unknown, now existing or
hereafter arising, contingent or liquidated, including, without limitation, (i)
any Tax liabilities pertaining to any of the Transferred Assets, the Seller or
its business for periods prior to and including the Closing Date, (ii) any Debt
Obligations, (iii) all liabilities and obligations relating to any products
manufactured, sold or distributed or services provided by or on behalf of the
Seller or with respect to any claims made by any Person in connection with
products manufactured, sold or distributed or services provided by or on behalf
of the Seller, (iv) all Pre-Closing Obligations and (v) all liabilities and
obligations of any Person related to the conduct or operation of the
Transferred Assets or the Seller's business on or prior to the Closing Date
(collectively, the "Retained Liabilities"), and the Buyer shall not assume, or
in any way be liable or responsible for, any of such Retained Liabilities.
1.5 Transfer Taxes; Recording Fees. The Buyer and the Seller
acknowledge and agree that the Purchase Price includes and is inclusive of any
and all sales, use, transfer or other similar Taxes imposed as a result of the
consummation of the transactions contemplated by this Agreement, and the Seller
and the Shareholder hereby jointly and severally agree to indemnify the Buyer
against, and agree to protect, save and hold the Buyer harmless from, any loss,
liability, obligation or claim (whether or not ultimately successful) for
sales, use, transfer or other similar Taxes (and any interest, penalties,
additions to tax and fines thereon or related thereto) imposed as a result of
the consummation of the transactions contemplated by this Agreement, including,
without limitation, any liability to which any of the parties may become
subject as a result of the fact that the transactions contemplated by this
Agreement are effected without compliance with the bulk sales provisions of the
Uniform Commercial Code as in effect in any state or any similar statute as
enacted in any jurisdiction. The Buyer shall pay any and all recording, filing
or other fees relating to the conveyance or transfer of the Transferred Assets
from the Seller to the Buyer.
1.6 Allocation of Purchase Price. The Cash Payment shall be allocated
among the Transferred Assets by the Buyer in its sole discretion. The
Weatherford Shares shall be allocated to the covenants of the Shareholder
contained in Section 5.9.
1.7 Prorations of Certain Expenses and Property Taxes. The Seller and
the Shareholder warrant that the Transferred Assets are not, and on the Closing
Date will not be, subject to or liable for any special assessments or similar
types of impositions. Any general property Tax assessed against or pertaining
to the Transferred Assets for the taxable period that includes the Closing Date
shall be prorated between the Buyer and the Seller as of the Closing Date. In
the event the amount of any such general property Tax cannot be ascertained as
of the Closing Date, proration shall be made on the basis of the preceding
year, the Buyer shall
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receive a credit against the Cash Payment on the Closing Date for the Seller's
pro rata portion of such general property Taxes, and to the extent that such
proration may be inaccurate, the Seller and the Buyer agree to make such
payment to the other after the tax statements have been received as is
necessary to allocate such general property Tax properly between the Seller and
the Buyer as of the Closing Date.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SHAREHOLDER
The Seller and the Shareholder hereby jointly and severally represent
and warrant to the Buyer and Weatherford and agree as follows:
2.1 Corporate Matters. The Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Texas. The
Seller is duly authorized, qualified and licensed and has all requisite power
and authority under all applicable laws, ordinances and orders of public
authorities to own, operate and lease its properties and assets and to carry on
its business in the places and in the manner currently conducted. The Seller
has all requisite corporate power and authority to enter into this Agreement
and to perform its obligations under this Agreement. The Shareholder has all
requisite legal capacity, power and authority to enter into this Agreement and
to perform his obligations under this Agreement.
2.2 Validity of Agreement and Conflict with Other Instruments.
(a) This Agreement, and all transactions contemplated hereby,
have been duly authorized and approved by the board of directors and the
Shareholder. No further corporate action is necessary on the part of the Seller
to execute and deliver this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
each of the Seller and the Shareholder and is a legal, valid and binding
obligation of the Seller and the Shareholder enforceable against them in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect that affect creditors' rights generally and by
legal and equitable limitations on the availability of specific remedies.
(b) The execution, delivery and performance of this Agreement
and the other agreements and documents to be delivered by each of the Seller
and the Shareholder to the Buyer, the consummation of the transactions
contemplated hereby or thereby, and the compliance with the provisions hereof
or thereof, by each of the Seller and the Shareholder will not, with or without
the passage of time or the giving of notice or both: (i) conflict with,
constitute a breach, violation or termination of any provision of, or give rise
to any right of termination, cancellation or acceleration, or loss of any right
or benefit or both, under, any of the Orders or the Orders in Production; (ii)
conflict with or violate the articles of incorporation or by-laws of the
Seller; (iii) result in the creation or imposition of any Lien on any of the
Transferred Assets; (iv) violate any law, statute, ordinance, regulation,
judgment, writ, injunction, rule, decree, order or any other restriction of any
kind or character applicable to the Seller or the Shareholder or any of their
respective properties or assets; or (v) conflict with, constitute a breach,
violation or termination of any agreement or understanding, whether written or
otherwise, to which either of the Seller or the Shareholder is a party or by
which it or he is bound.
2.3 Approvals, Licenses and Authorizations.
(a) No order, license, consent, waiver, authorization or
approval of, or exemption by, or the giving of notice to, or the registration
with, or the taking of any other action in respect of, any Person not a party
to this Agreement, including any Governmental Entity, and no filing, recording,
publication or registration in any public office or any other place is now, or
under existing law in the future will be,
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necessary on behalf of the Seller or the Shareholder to authorize the
execution, delivery and performance of this Agreement or any other agreement
contemplated hereby to be executed and delivered by the Seller or the
Shareholder and the consummation of the transactions contemplated hereby or
thereby (including, but not limited to, assignment of the Transferred Assets),
or to effect the legality, validity, binding effect or enforceability thereof.
(b) All licenses, permits, concessions, warrants, franchises
and other governmental authorizations and approvals of all Governmental
Entities required or necessary for the Seller to carry on its business in the
places and in the manner currently conducted have been duly obtained and are in
full force and effect. No violations are in existence or have been recorded
with respect to such licenses, permits or other authorizations and no
proceeding is pending or, to the best knowledge of the Seller and the
Shareholder, threatened with respect to the revocation or limitation of any of
such licenses, permits or other authorizations. The Seller has complied with
all laws, rules, regulations and orders applicable to its business, and all
rules, regulations and orders respecting the provision of products and services
by the Seller.
2.4 Title to and Condition of Properties. All of the Transferred
Assets are set forth in Section 1.1 of the Disclosure Schedule. All of the
Transferred Assets are in the Seller's possession and control. The Seller has,
or will have as of the Closing, good and marketable title to all of the
Transferred Assets free and clear of all Liens. Other than the warranties set
forth herein, the Buyer acknowledges that the Transferred Assets will be sold
on an "AS IS, WHERE IS, WITH FAULTS" BASIS, WITHOUT ANY WARRANTIES, EXPRESS OR
IMPLIED, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR OF INCOME
POTENTIAL.
2.5 Contracts and Commitments.
(a) Except as set forth in Section 2.5 of the Disclosure
Schedule, none of the Transferred Assets is subject to: (i) any agreement,
contract or commitment requiring the expenditure or series of related
expenditures of funds in excess of $5,000 (other than purchase orders in the
ordinary course of business necessary for the Seller to complete the Orders or
the Orders in Production); (ii) any agreement, contract or commitment requiring
the payment for goods or services whether or not such goods or services are
actually provided or the provision of goods or services at a price less than
the Seller's cost of producing such goods or providing such services; (iii) 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) any Debt Obligations; (v) any agreement, contract or
commitment that would limit the freedom of the Buyer or any of its Affiliates
following the Closing Date to engage in any line of business, to own, operate,
sell, transfer, pledge or otherwise dispose of or encumber any of the
Transferred Assets or to compete with any Person or to engage in any business
or activity in any geographic area; (vi) any agreement, lease, contract or
commitment or series of related agreements, leases, contracts or commitments
not entered into in the ordinary course of Seller's business, (vii) any
agreement or contract obligating the Seller or that would obligate or require
any subsequent owner of any of the Transferred Assets to provide for
indemnification or contribution with respect to any matter; (viii) any sales,
distributorship or similar agreement relating to the products sold or services
provided by the Seller; or (ix) any license, royalty or similar agreement.
(b) The Seller is not, and as of the Closing Date will not
be, in breach of any provision of, or in default (and neither the Seller nor
the Shareholder has any knowledge of any event or circumstance that with
notice, or lapse of time or both, would constitute an event of default) under
the terms of any of the Orders or Orders in Production. All of the Orders and
Orders in Production are, in full force and effect. Neither the Seller nor the
Shareholder is aware of any pending or threatened disputes with respect to any
of the Orders or Orders in Production. The enforceability of the Orders and
Orders in Production will not be affected in any manner by the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby. Seller will use its best efforts to ensure that all of the Orders and
Orders
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in Production remain in full force and effect and agrees to immediately provide
Buyer notice if any Order or Order in Production is canceled.
2.6 Taxes.
(a) All Tax Returns that are required to be filed (taking
into account all extensions) on or before the Closing Date for, by, on behalf
of or with respect to the Seller, including, but not limited to, those relating
to the Seller's business and the Transferred Assets, and those which include or
should include the Seller or the Transferred Assets, have been or will be
timely filed with the appropriate foreign, federal, state and local authorities
on or before the Closing Date, and all Taxes shown to be due and payable on
such Tax Returns or related to such Tax Returns have been or will be timely
paid in full on or before the Closing Date.
(b) 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 Seller, its business or the Transferred Assets, or with
respect to any such Tax Return, or any suits or other actions, proceedings,
investigations or claims now pending or threatened against the Seller, its
business or the Transferred Assets with respect to any Tax, or any matters
under discussion with any foreign, federal, state or local authority relating
to any Tax, or any claims for any additional Tax asserted by any such
authority.
2.7 No Litigation. Except as set forth in Section 2.7 of the
Disclosure Schedule, there is no action, suit, claim, judgment, investigation
or legal, administrative, arbitration or other proceeding, or governmental
investigation or examination, pending or, to the knowledge of each of the
Seller and the Shareholder, threatened against or affecting the Seller or any
of the Transferred Assets, at law or in equity, before or by any Governmental
Entity and, to the best knowledge of each of the Seller and the Shareholder, no
basis exists for any such action, suit, claim, investigation or proceeding.
2.8 Warranties and Product Liability.
(a) Except for (i) warranties implied by law and (ii)
warranties disclosed in Section 2.8 of the Disclosure Schedule, the Seller has
not given or made any warranties in connection with the sale or rental, if any,
of goods or services on or prior to the Closing, including, without limitation,
warranties covering the customer's consequential damages. Neither the Seller
nor the Shareholder is aware of any state of facts or the occurrence of any
event forming the basis of any present claim against the Seller with respect to
warranties relating to products manufactured, sold or distributed by the Seller
or services performed by or on behalf of the Seller on or prior to the Closing.
(b) To the knowledge of each of the Seller and the
Shareholder, there is no state of facts or any event forming the basis of any
present claim against the Seller, its business or the Transferred Assets not
fully covered by insurance, except for deductibles and self-insurance
retentions, for personal injury or property damage alleged to be caused by
products shipped or services rendered by or on behalf of the Seller.
2.9 Finder's Fees. None of the Seller or the Shareholder or any of
their respective Affiliates has employed or retained any investment banker,
broker, agent, finder or other party, or incurred any obligation for brokerage
fees, finder's fees or commissions, with respect to the sale by the Seller of
any of the Transferred Assets or with respect to the transactions contemplated
by this Agreement, or otherwise dealt with anyone purporting to act in the
capacity of a finder or broker with respect thereto whereby any party hereto
may be obligated to pay such a fee or commission. The Seller and the
Shareholder agree to indemnify and hold the Buyer and its Affiliates harmless
from and against any and all claims, liabilities or obligations
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with respect to all fees, commissions or expenses asserted by any Person on the
basis of any act, statement, agreement or commitment alleged to have been made
by the Seller or the Shareholder or any Affiliate of the Seller or the
Shareholder with respect to any such fee, commission or expense.
2.10 Insurance. Section 2.10 of the Disclosure Schedule sets forth all
existing insurance policies held by the Seller relating to the Transferred
Assets. Each such policy is in full force and effect and is with responsible
insurance carriers. There is no dispute with respect to such policies, and all
claims arising from events or circumstances occurring prior to the date hereof
have been paid in full or adequate reserves therefor are recorded in the
Financial Statements.
2.11 Securities Law Matters.
(a) The Shareholder recognizes and understands that the
Weatherford Shares to be issued to the Shareholder (the "securities") will not,
except as expressly provided in Article 4, be registered under the Securities
Act, or under the securities laws of any state (the "securities laws"). The
securities are not being so registered in reliance upon exemptions from the
Securities Act and the securities laws which are predicated, in part, on the
representations, warranties and agreements of the Shareholder contained herein.
(b) The Shareholder represents and warrants that (i) the
Shareholder has business knowledge and experience, such experience being based
on actual participation therein, (ii) the Shareholder is capable of evaluating
the merits and risks of an investment in the Weatherford Shares and the
suitability thereof as an investment therefor, (iii) the Weatherford Shares
will be acquired by the Shareholder solely for investment and not with a view
toward resale or redistribution in violation of the securities laws, (iv) the
Shareholder is an individual whose principal residence is in Longview, Texas,
(v) in connection with the transactions contemplated hereby, no assurances have
been made concerning the future results of the Buyer or Weatherford or as to
the value of the Weatherford Shares and (vi) the Shareholder is an "accredited
investor" within the meaning of Regulation D promulgated by the Commission
pursuant to the Securities Act. The Shareholder understands that neither
Weatherford nor the Buyer is under any obligation to file a registration
statement or to take any other action under the securities laws with respect to
any such securities except as expressly set forth in Article 4 hereof.
(c) The Shareholder has consulted with his own counsel in
regard to the securities laws and are fully aware (i) of the circumstances
under which the Shareholder is required to hold the securities, (ii) of the
limitations on the transfer or disposition of the securities, (iii) that the
securities must be held indefinitely unless the transfer thereof is registered
under the securities laws or an exemption from registration is available and
(iv) that no exemption from registration is likely to become available for at
least one year from the date of acquisition of the securities. The Shareholder
has been advised by his counsel as to the provisions of Rules 144 and 145 as
promulgated by the Commission under the Securities Act and have been advised of
the applicable limitations thereof. The Shareholder acknowledges that
Weatherford and the Buyer are relying upon the truth and accuracy of the
representations and warranties in this Section 2.11 by the Shareholder in
consummating the transactions contemplated by this Agreement without
registering the securities under the securities laws.
(d) The Shareholder has been furnished with the SEC
Documents. The Shareholder has been furnished with a summary description of the
terms of this Agreement, the Weatherford Shares and Weatherford, and the Buyer
and Weatherford have made available to the Shareholder the opportunity to ask
questions and receive answers concerning the terms and conditions of the
transactions contemplated by this Agreement and to obtain any additional
information which they possess or could reasonably acquire for the purpose of
verifying the accuracy of information furnished to the Shareholder as set forth
herein or for the purpose of considering the transactions contemplated hereby.
Weatherford has offered to make available
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to the Shareholder upon request at any time all exhibits filed by Weatherford
with the Commission as part of any of the reports filed therewith.
(e) The Shareholder agrees that the certificates representing
the Weatherford Shares will be imprinted with the following legend, the terms
of which are specifically agreed to:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, OR THE SECURITIES LAWS OF ANY STATE, IN RELIANCE UPON EXEMPTIONS
FROM REGISTRATION REQUIREMENTS. WITHOUT SUCH REGISTRATION, SUCH SHARES
MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED,
EXCEPT UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED FOR SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER OR THE
SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE, PLEDGE,
HYPOTHECATION OR TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER.
The Shareholder understands and agrees that appropriate stop transfer notations
will be placed in the records of Weatherford and with its transfer agents in
respect of the securities which are to be issued to the Shareholder.
Weatherford agrees that any Weatherford Shares sold pursuant to an effective
registration statement, including a registration statement filed pursuant to
Article 4 hereof, shall have the above legend removed to permit the closing of
the sale within three Business Days of written notice of the sale and
certification by the Shareholder that the sale was made pursuant to the plan of
distribution described in the registration statement and the prospectus
delivery requirements under the Securities Act were fully complied with in
connection with the sale.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND WEATHERFORD
The Buyer and Weatherford jointly and severally represent and warrant
to the Seller and the Shareholder as follows:
3.1 Corporate Matters. The Buyer and Weatherford are corporations
validly existing and in good standing under the laws of Delaware. Each of
Weatherford and the Buyer has all requisite power and authority to enter into
this Agreement and to perform its obligations under this Agreement. This
Agreement has been duly authorized, executed and delivered by each of
Weatherford and the Buyer and is a legal, valid and binding obligation of each
of Weatherford and the Buyer, enforceable in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect that
affect creditors' rights generally and by legal and equitable limitations on
the availability of specific remedies.
3.2 Approvals, Licenses and Authorizations. Except as contemplated by
this Agreement, no order, license, consent, waiver, authorization or approval
of, or exemption by, or the giving of notice to, or the registration with, or
the taking of any other action in respect of, any Person not a party to this
Agreement, including any Governmental Entity, and no filing, recording,
publication or registration in any public office or any other place is now, or
under existing law in the future will be, necessary on behalf of the Buyer or
Weatherford to authorize its execution, delivery and performance of this
Agreement or any other agreement
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contemplated hereby to be executed and delivered by the Buyer or Weatherford
and the consummation by the Buyer and Weatherford of the transactions
contemplated hereby or thereby, or to effect the legality, validity, binding
effect or enforceability thereof.
3.3 Authorization for the Weatherford Shares. Weatherford has taken,
or will have taken prior to Closing, all necessary action to permit it to issue
the Weatherford Shares. The Weatherford Shares issued pursuant to the terms of
this Agreement will be validly issued, fully paid and nonassessable and not
subject to preemptive rights. The Weatherford Shares will be listed on the New
York Stock Exchange.
3.4 SEC Documents. Weatherford has made available to the Seller and
the Shareholder all of the SEC Documents. The SEC Documents represent each
report filed by Weatherford with the Commission since March 30, 1999. As of
their respective dates, the SEC Documents (i) were prepared in all material
respects in accordance with the applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
applicable to such documents and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading except for such statements, if any,
as have been modified by subsequent filing with the Commission prior to the
date hereof. The consolidated financial statements of Weatherford included in
the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of Weatherford and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended. Since December
31, 1998, other than as discussed in the SEC Documents, there has been no
material adverse change in the business of Weatherford and its Subsidiaries,
taken as a whole.
ARTICLE 4
REGISTRATION RIGHTS
4.1 Registration Rights.
(a) Weatherford will use its best efforts to register under
the Securities Act the Weatherford Shares pursuant to a non-underwritten
offering having a period of distribution not to exceed one year from the
Closing Date. In furtherance of such obligation, Weatherford shall file, within
30 Business Days after the Closing Date, with the Commission a registration
statement on the appropriate form seeking the registration for resale of the
Weatherford Shares (the "Registration Statement"), pursuant to a
non-underwritten offering in accordance with the plan of distribution described
therein. References in this Article 4 to the Weatherford Shares shall be deemed
to include any shares of Common Stock or other securities received by the
Shareholder on account of any stock split, stock dividend or merger of
Weatherford.
(b) Notwithstanding anything to the contrary contained in
this Section 4.1, Weatherford shall not be obligated to prepare and file the
Registration Statement pursuant to this Section 4.1, or prepare or file any
amendment or supplement thereto, at any time when Weatherford reasonably
believes that the filing thereof, or the offering of securities pursuant
thereto, would adversely affect a pending or proposed public offering of
securities of Weatherford, an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction relating to Weatherford or
negotiations, discussions or pending proposals with respect thereto or require
premature disclosure of information not otherwise required to be disclosed to
the potential detriment of Weatherford.
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(c) Notwithstanding anything to the contrary contained in
this Section 4.1, Weatherford shall be permitted, on written notice to the
Shareholder, to suspend the period of sale or distribution of the Weatherford
Shares at any time when Weatherford reasonably believes that the sale or
distribution thereof would adversely affect a pending or proposed public
offering of securities of Weatherford, an acquisition, merger,
recapitalization, consolidation, reorganization or similar transaction relating
to Weatherford or negotiations, discussions or pending proposals with respect
thereto or require premature disclosure of information not otherwise required
to be disclosed to the potential detriment of Weatherford.
(d) The filing of the Registration Statement, or any
amendment or supplement thereto, by Weatherford may not be deferred pursuant to
Section 4.1(b), and the sale and distribution of the Weatherford Shares may not
be suspended pursuant to Section 4.1(c), for more than 60 days after the
abandonment or consummation (or the completion of the distribution of
securities in the case of a public offering) of any of the proposals or
transactions described therein or, in any event, for more than 120 days.
(e) The Shareholder agrees and covenants to fully cooperate
with and assist Weatherford and its counsel and representatives in connection
with Weatherford's obligations under this Article 4, including providing such
information as requested by Weatherford in connection the preparation of the
Registration Statement and the resale of the Weatherford Shares.
4.2 Procedure. Weatherford will, subject to the provisions of
Sections 4.1, 4.2 and 4.4 hereof:
(a) seek to cause the Registration Statement to become and
remain effective;
(b) as expeditiously as reasonably practicable, prepare and
file with the Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection therewith as may be necessary
to keep the Registration Statement effective and to comply with the provisions
of the Securities Act with respect to the disposition of the Weatherford Shares
covered by the Registration Statement in accordance with the intended method of
distribution set forth therein;
(c) as expeditiously as reasonably practicable, furnish to
the Shareholder such number of copies of prospectuses and preliminary
prospectuses in conformity with the requirements of the Securities Act, and
such other documents as the Shareholder may reasonably request, in order to
facilitate the public sale or other disposition of the Weatherford Shares owned
by the Shareholder; provided, however, that the obligation of Weatherford to
deliver copies of prospectuses or preliminary prospectuses to the Shareholder
shall be subject to the receipt by Weatherford of reasonable assurances from
the Shareholder that it will comply with the applicable provisions of the
Securities Act and of such other securities laws as may be applicable in
connection with any use by it of any prospectuses or preliminary prospectuses;
(d) as expeditiously as practicable, use its best efforts to
register or qualify the Weatherford Shares under such other securities laws of
such United States jurisdictions as the Shareholder shall reasonably request
(considering the nature and size of the offering) and do any and all other acts
and things which may be necessary or desirable to enable the Shareholder to
consummate the public sale or other disposition in such jurisdictions of the
Weatherford Shares; provided, however, that Weatherford shall not be required
to qualify to transact business as a foreign corporation in any jurisdiction in
which it would otherwise not be required to be so qualified or to take any
action which would subject it to general service of process in any jurisdiction
in which it is not then so subject;
(e) bear all Registration Expenses (as defined below) in
connection with the registration hereunder; provided, however, that all Selling
Expenses (as defined below) of the Weatherford Shares and all fees and
disbursements of Shareholder's counsel shall be borne by the Shareholder. For
purposes of this Section 4.2, expenses incurred by Weatherford in complying
with this Agreement include (i) all registration
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and filing fees; (ii) all printing expenses, (iii) all fees and disbursements
of counsel for Weatherford, (iv) all blue sky fees and expenses, and (v) all
fees and expenses of accountants for Weatherford are herein referred to as
"Registration Expenses". All brokerage and selling commissions and fees and
expenses of counsel for the Shareholder in connection with any such
registration or resale are herein referred to as "Selling Expenses"; and
(f) keep the registration pursuant to Section 4.1 hereof
effective for a period of up to one year following the Closing Date or such
shorter period of time until the transfer or sale of all the Weatherford Shares
has been completed.
4.3 Indemnification.
(a) In the event of a registration of the Weatherford Shares
under the Securities Act pursuant to this Agreement, Weatherford will indemnify
and hold harmless the Seller and the Shareholder and any other Person, if any,
who controls the Seller or the Shareholder within the meaning of Section 15 of
the Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which the Seller or the Shareholder or such controlling Person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities or actions in respect thereof arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in the Registration
Statement, any preliminary prospectus distributed with the consent of
Weatherford or final prospectus contained therein, or any amendment thereof or
supplement thereto, including all documents incorporated by reference therein,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will, unless Weatherford assumes the
defense as provided in Section 4.3(c), promptly following request and receipt
of reasonable supporting documents, such as invoices, reimburse the Seller and
the Shareholder and each such controlling Person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that Weatherford will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such Registration Statement, such preliminary prospectus, such final prospectus
or such amendment or supplement, including all documents incorporated by
reference therein, in reliance upon and in conformity with written information
furnished to Weatherford by or on behalf of the Seller or the Shareholder or a
controlling Person thereof specifically for use in the preparation thereof.
(b) In the event of any registration of the Weatherford
Shares under the Securities Act pursuant to this Agreement, the Seller and the
Shareholder will jointly and severally indemnify and hold harmless Weatherford
and the Buyer and each Person, if any, who controls Weatherford or the Buyer
within the meaning of Section 15 of the Securities Act, each officer of
Weatherford who signs the Registration Statement, each director of Weatherford
and each Person who controls any underwriter (if any) within the meaning of
Section 15 of the Securities Act, against any and all such losses, claims,
damages, liabilities or actions which Weatherford or such officer, director,
underwriter (if any) or controlling Person may become subject under the
Securities Act or otherwise, and will reimburse Weatherford, each such officer,
director, underwriter (if any) and controlling Person for any legal or any
other expenses reasonably incurred by such party in connection with
investigating or defending any such loss, claim, damage, liability or action,
if (i) such loss, claim, damage, liability or action in respect thereof arises
out of or is based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any such prospectus,
or any amendment thereof or supplement thereto, or arises out of or is based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
and such statement or omission of a material fact was made in reliance upon and
in conformity with written information furnished to Weatherford by or on behalf
of the
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Seller or the Shareholder specifically for use in connection with the
preparation of the Registration Statement or prospectus or (ii) such loss,
claim, damage, liability or action in respect thereof arises out of or is based
upon the Seller's or the Shareholder's failure to deliver any required
prospectus or otherwise comply with applicable laws regarding the same.
(c) Promptly after receipt by any indemnified Person of
notice of any claim or commencement of any action in respect of which indemnity
is to be sought against an indemnifying Person pursuant to this Agreement, such
indemnified Person shall notify the indemnifying Person in writing of such
claim or of the commencement of such action, and, subject to provisions
hereinafter stated, in case any such action shall be brought against an
indemnified Person and such indemnifying Person shall have been notified of the
same, such indemnifying Person shall be entitled to participate therein, and,
to the extent it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified Person, and after notice from the
indemnifying Person to such indemnified Person of its election to assume the
defense thereof, such indemnifying Person shall not be liable to such
indemnified Person in connection with the defense thereof; provided, however,
if there exists or will exist a conflict of interest which would make it
inappropriate in the reasonable judgment of the indemnified Person for the same
counsel to represent both the indemnified Person and such indemnifying Person
then such indemnifying Person shall be entitled to retain its own counsel at
the expense of such indemnifying Person; provided further, however, the
indemnifying Person shall not be required to pay for more than one separate
counsel for all of the indemnified Persons in addition to any local counsel.
Payment of any amounts due pursuant to this Section 4.3 shall be made within
ten Business Days after notice is sent by the indemnified Person.
(d) If the indemnification provided for in this Article 4 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with the respect to the loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or
expense in such proportion as appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as, any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party should be determined by reference to, among others, whether
the untrue or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the indemnifying party
or the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement of omission.
4.4 Termination. If Rule 144 or Rule 145 as promulgated under the
Securities Act or any successor or similar rule or statute shall permit the
sale of the Weatherford Shares, the rights of the Shareholder as to the
registration provided for in this Agreement as to the Weatherford Shares shall
terminate immediately.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Access to Information.
(a) Until the Closing, the Seller will furnish the Buyer and
its employees, officers, accountants, attorneys, agents, investment bankers and
other authorized representatives with all financial, operating and other data
and information concerning the business, commitments and properties of the
Seller as the Buyer shall from time to time reasonably request and will afford
the Buyer and its employees, officers, accountants, attorneys, agents,
investment bankers and other authorized representatives reasonable access
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to the Seller's offices, properties, books, records, contracts and documents
and will be given the opportunity to ask questions of, and receive answers
from, representatives of the Seller with respect to the Transferred Assets. No
investigations by the Buyer or its employees, representatives or agents shall
reduce or otherwise affect the obligation or liability of the Seller with
respect to any representations, warranties, covenants or agreements made herein
or in any exhibit, schedule or other certificate, instrument, agreement or
document, including the Disclosure Schedule, executed and delivered in
connection with this Agreement. The Seller will cooperate with the Buyer and
its employees, officers, accountants, attorneys, agents and other authorized
representatives in the preparation of any documents or other materials that may
be required by any Governmental Entity.
(b) Notwithstanding any provision in this Agreement to the
contrary, if any party hereto learns between the date of this Agreement and the
Closing Date that any warranty or representation made by such party in this
Agreement or in any schedule, exhibit, certificate or document delivered
pursuant to the provisions in this Agreement, is no longer true, then such
party shall immediately give written notice ("Written Notice") to the other
party of such fact. The other party shall then have five days from the receipt
of the Written Notice to terminate this Agreement by providing the notifying
party with written notice ("Termination Notice") of its election to terminate
this Agreement. If the party to whom Written Notice was given fails to provide
the Termination Notice within five Business Days after the receipt of a Written
Notice, then such party shall be deemed to have waived its right to terminate
this Agreement with respect only to the items in the Written Notice and the
warranty or representation to which the Written Notice pertained shall be
deemed modified to include the information included in the Written Notice. If
no Written Notice is given before the Closing Date, all such representations
and warranties shall be deemed true and correct on the Closing Date.
(c) Each party hereto agrees to hold in confidence all, and
not to disclose to others for any reason whatsoever, any non-public information
received by it or its representatives from the other party hereto in connection
with the transactions contemplated by this Agreement except (i) as required by
law; (ii) for disclosure to officers, directors, employees and representatives
of such party as necessary in connection with the transactions contemplated
hereby or as necessary to the operation of such party's business; and (iii) for
information that becomes publicly available other than through such party. If
the transactions contemplated by this Agreement are not consummated, each party
hereto will return to the other party hereto all non-public documents and other
material obtained from the such other party hereto, and all copies, summaries
and extracts thereof, or certify to such other party hereto that such
information has been destroyed.
5.2 Storage of Transferred Assets. The Buyer shall have the right, for
a period of 90 days following the Closing Date, and for no additional
consideration other than the Purchase Price, to store the Transferred Assets at
the Seller's facilities in Navasota, Texas. During such 90-day period, the
Seller shall provide the Buyer reasonable access to such facilities to allow
the Buyer to relocate the Transferred Assets to the Buyer's facilities. The
Seller shall not be required to provide insurance for such stored items.
5.3 Inventory, Orders and Orders in Production. The Seller and the
Buyer agree to enter into an agreement, the form of which is attached hereto as
Exhibit A, as of the Closing Date whereby the Seller will sell certain
inventory to the Buyer or one of its Affiliates and will transfer all Orders
(the "Inventory Agreement"). All Orders in Production shall be completed by the
Seller within 20 days of the Closing Date.
5.4 Conduct of the Seller's Business. The Seller covenants and agrees
with the Buyer that from and after the date hereof until the Closing, except as
expressly authorized by this Agreement or as expressly consented to in writing
by the Buyer, the Seller shall:
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(a) operate its business and the Transferred Assets only in
the usual, regular and ordinary manner and, to the extent consistent
with such operation, will use all reasonable efforts to preserve
intact its present business organization, keep available the services
of its employees and preserve its relationship with its customers,
suppliers, jobbers, distributors and other Persons having business
relations with it;
(b) use all reasonable efforts to maintain the Transferred
Assets in a state of repair, order and condition consistent with its
usual past practice;
(c) maintain its books of account and records relating to its
business in the usual, regular and ordinary manner, in accordance with
the Seller's usual accounting practices applied on a consistent basis;
(d) comply in all respects with all statutes, laws, orders
and regulations applicable to it and to its business;
(e) not sell, assign, transfer, lease or otherwise dispose of
any of the Transferred Assets or sell, assign, trade, lease, rent or
otherwise dispose of any inventory or other assets of the Seller
outside of the ordinary course of business;
(f) not mortgage, pledge or otherwise create a security
interest in any of the Transferred Assets or permit there to be
created or exist any Liens thereon that would not be released upon the
transfer of the Transferred Assets to the Buyer pursuant to this
Agreement;
(g) not enter into any contract, commitment or lease in
relation to its business or the Transferred Assets that is out of the
ordinary course of business;
(h) not amend or modify any of the Orders or Orders in
Production;
(i) not consent to the termination of any of the Orders or
Orders in Production or waive any of the Seller's rights with respect
thereto;
(j) not permit any insurance policy naming it as a
beneficiary or a loss payee relating to its business or the
Transferred Assets to be canceled or terminated or any of the coverage
thereunder to lapse unless simultaneously with such termination or
cancellation replacement policies providing substantially the same
coverage are in full force and effect;
(k) pay when due all accounts payable, all payments required
with respect to any of the Orders or Orders in Production and all
Taxes other than Taxes that are being contested in good faith and for
which adequate reserves against the Transferred Assets exist and which
would not result in a Lien being imposed on any of the Transferred
Assets; and
(l) promptly notify the Buyer in writing if the Seller
becomes aware of any change that shall have occurred or that shall
have been threatened (or any development that shall have occurred or
that shall have been threatened involving a prospective change) in the
Seller's business or the Transferred Assets that would reasonably be
expected to have a material or adverse effect on the Seller's business
or the Transferred Assets whether or not occurring in the ordinary
course of business.
5.5 Negotiation with Others. The Seller agrees that from the date
hereof until the Closing Date or the termination of this Agreement pursuant to
Section 10.1, the Seller will not, directly or indirectly,
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solicit, encourage or negotiate with any Person not a party hereto or not
affiliated with a party hereto with respect to a merger, consolidation, asset
or stock purchase or any similar transaction with the Seller.
5.6 Information. During the period from the date of this Agreement to
the Closing Date, the Buyer and the Seller will promptly inform the other in
writing of any claim, action or any proceeding commenced against such party
with respect to the transactions contemplated by this Agreement or any assets
or property of the Seller or the Transferred Assets.
5.7 Delivery of Business Documents. At Closing, the Seller shall
deliver to the Buyer all Documents and Other Papers relating to the Transferred
Assets, copies of all insurance policies and all files relating thereto,
computer disks reflecting any books or records, documents or other papers, or
other information or data relating to the Transferred Assets stored on any
electronic media, including computers.
5.8 Further Assurances. The Seller shall execute, acknowledge and
deliver or cause to be executed, acknowledged and delivered to the Buyer such
bills of sale, assignments and other instruments of transfer, assignment and
conveyance, in form and substance reasonably satisfactory to counsel for the
Buyer and counsel for the Seller, as shall be necessary to vest in the Buyer
all the right, title and interest in and to the Transferred Assets free and
clear of all Liens (including the release of all Liens of record) and shall use
their best efforts to cause to be taken such other action as the Buyer
reasonably may require to more effectively implement and carry into effect the
transactions contemplated by this Agreement.
5.9 Covenant Not to Compete With its Business. As an inducement for
the Buyer to acquire the Transferred Assets, the Seller and Shareholder agree
that, effective as of the Closing Date and for a period of three years
thereafter, neither the Seller nor the Shareholder nor any of their respective
Affiliates shall, without the consent of the Buyer, directly or indirectly,
design, develop, market, produce, manufacture, sell, convert, trade, provide or
repair any oilfield coupling (whether API or not) products or provide services
related thereto in any geographical area of the world, or, except for the
benefit of the Buyer and its Affiliates, assist any Person to do the same;
provided, however, the foregoing shall not prohibit the Seller and the
Shareholder from participating in the coupled pipe trading business. The Seller
and the Shareholder acknowledge that a remedy at law for any breach or
attempted breach of this Section 5.9 will be inadequate and further agree that
any breach of this Section 5.9 will result in irreparable harm to the Buyer's
business and the Buyer 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. The Seller and
the Shareholder acknowledge that this covenant not to compete is being provided
as an inducement to the Buyer to acquire the Transferred Assets and that this
Section 5.9 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 the Buyer.
Whenever possible, each provision of this Section 5.9 shall be interpreted in
such a manner as to be effective and valid under applicable law but if any
provision of this Section 5.9 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 5.9. If any provision of this Section 5.9 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 5.9 but shall be confined in its operation to the
provision of this Section 5.9 directly involved in the controversy in which
such judgment shall have been rendered. In the event that the provisions of
this Section 5.9 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 the foregoing, nothing herein shall prevent the Seller or the
Shareholder from engaging in the manufacture, repair and sale of the current
VAM- look-alike coupling known as the HSC connection.
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5.10 Employee Matters. The Seller and the Buyer acknowledge and agree
that the Buyer has no obligation whatsoever to offer employment to any of the
employees of the Seller. All of the Seller's employees who are not employed by
the Buyer or one of its Affiliates immediately after the Closing Date shall
hereinafter be referred to as the "Seller Retained Employees". The Seller shall
be responsible and liable for any and all severance obligations with respect to
the Seller Retained Employees, including any COBRA obligations. The parties
hereto do not intend to create any third-party beneficiary rights respecting
any employee of the Seller as a result of the provisions hereof and
specifically hereby negate any such intention.
ARTICLE 6
BUYER'S AND WEATHERFORD'S CONDITIONS
The obligation of the Buyer to purchase the Transferred Assets as
contemplated hereby is, at the option of the Buyer and Weatherford, subject to
the satisfaction on or before the Closing Date of the conditions set forth
below, any of which may be waived by the Buyer or Weatherford in writing;
provided, however, the Buyer's and Weatherford's election to proceed with the
Closing shall not be deemed a waiver of any breach of any representation,
warranty or covenant herein, whether or not known to the Buyer or Weatherford
or existing on the Closing Date, and such action shall not prejudice the
Buyer's and Weatherford's right to recover damages for any such breach.
6.1 Representations, Warranties and Covenants. The representations and
warranties of the Seller and the Shareholder contained in this Agreement shall
be true, correct and complete in all material respects on and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made or given on and as of such date. Each and all of the
agreements and covenants of the Seller and the Shareholder to be performed or
complied with by it or him on or before the Closing Date pursuant to this
Agreement shall have been performed or complied with in all respects. The
Seller shall have delivered to the Buyer a certificate signed by one of its
duly authorized officers, and the Shareholder shall have signed and delivered a
certificate, dated the Closing Date regarding the matters set forth in this
Section 6.1.
6.2 Good Standing. The Seller shall have delivered to the Buyer a
certificate issued by appropriate Governmental Entities evidencing the good
standing of the Seller, as of a date not more than five calendar days prior to
the Closing Date, in the State of Texas. To the extent provided for under
applicable law, the Seller shall also have delivered to the Buyer certificates
or other writings issued by appropriate Governmental Entities evidencing that
all applicable franchise Taxes have been paid.
6.3 Instruments of Transfer. The Seller shall have executed,
acknowledged and delivered to the Buyer the Inventory Agreement and such other
bills of sale, assignments and other instruments of transfer, assignment and
conveyance, as shall be necessary to vest in the Buyer all the right, title and
interest in and to the Transferred Assets.
6.4 No Litigation. No preliminary or permanent injunction or other
order of any court or other Governmental Entity shall be in effect nor shall
there be in effect any statute, rule, regulation or executive order promulgated
or enacted by any Governmental Entity that, in any such case, prevents the
consummation of the transactions contemplated by this Agreement. No suit,
action, claim, proceeding or investigation before any Governmental Entity shall
have been commenced or threatened by any Person other than the Buyer or any of
its Affiliates seeking to prevent the sale of the Transferred Assets or
asserting that the sale of all or a portion of the Transferred Assets would be
unlawful.
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6.5 Licenses, Consents and Approvals. The Seller shall have delivered
to the Buyer a copy of each of the licenses, consents, approvals and other
authorizations from Governmental Entities necessary or appropriate for the
Seller to consummate the transactions contemplated by this Agreement.
6.6 Consents and Release of Liens. All Liens on the Transferred Assets
shall be released at Closing and satisfactory evidence of the release of the
Liens and the termination of any financing statements relating thereto shall be
provided to the Buyer at Closing. In this regard, the Seller may request the
Buyer to pay any portion of the Purchase Price to certain other Persons in
connection with the payment of any indebtedness and release of Liens on the
Transferred Assets.
6.7 Resolutions. The Seller shall have delivered to the Buyer
certified copies of resolutions of the board of directors of the Seller and the
Shareholder approving this Agreement and the transactions contemplated hereby.
6.8 Weatherford Share Price. The average of the closing price per
share of the Common Stock for the five consecutive trading days ending on the
first Business Day immediately preceding the Closing Date, as reported by the
New York Stock Exchange, must equal or exceed $17.00 per share.
6.9 Schedule of Orders and Orders in Production. The Seller shall have
delivered to the Buyer, at least three Business Days prior to the Closing Date,
a schedule of all orders and orders in Production, together with copies of any
purchase orders, related thereto.
ARTICLE 7
SELLER'S AND SHAREHOLDER'S CONDITIONS
The obligation of the Seller to transfer the Transferred Assets as
contemplated hereby is, at the option of the Seller and the Shareholder,
subject to the satisfaction on or before the Closing Date of the conditions set
forth below, any of which may be waived by the Seller or the Shareholder in
writing; provided, however, the Seller's and the Shareholder's election to
proceed with the Closing shall not be deemed a waiver of any breach of any
representation, warranty or covenant herein, whether or not known to the Seller
or the Shareholder or existing on the Closing Date, and such action shall not
prejudice the Seller's and the Shareholder's right to recover damages for any
breach.
7.1 Representations and Warranties. The representations and warranties
of each of the Buyer and Weatherford contained in this Agreement shall be true,
correct and complete in all material respects on and as of the Closing Date
with the same force and effect as though such representations and warranties
had been made or given on and as of such date; each and all of the agreements
and covenants of each of the Buyer and Weatherford to be performed or complied
with by it on or before the Closing Date pursuant to this Agreement shall have
been performed or complied with in all respects; and each of the Buyer and
Weatherford shall have delivered to the Seller a certificate signed by an
authorized officer of each of the Buyer and Weatherford, dated the Closing
Date, regarding the matters set forth in this Section 7.1.
7.2 No Litigation. No preliminary or permanent injunction or other
order of any Governmental Entity shall be in effect nor shall there be any
statute, rule, regulation or executive order promulgated or enacted by any
Governmental Entity that, in any such case, prevents the consummation of the
transactions contemplated by this Agreement. No suit, action, claim, proceeding
or investigation before any court or other Governmental Entity shall have been
commenced or threatened by any Person other than the Seller or any of its
Affiliates seeking to prevent the sale of the Transferred Assets or asserting
that the sale of all or a portion of the Transferred Assets would be unlawful.
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7.3 Resolutions. Each of the Buyer and Weatherford shall have
delivered to the Seller certified copies of resolutions of the board of
directors of the Buyer and Weatherford approving this Agreement and the
transactions contemplated hereby.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification by the Seller and the Shareholder. Except as
otherwise limited by this Article 8 and Article 9 hereof, the Seller and the
Shareholder jointly and severally agree to indemnify, defend and hold the
Buyer, Weatherford, each of their respective Affiliates and each of their
respective officers, directors, employees, agents, stockholders and controlling
Persons and their respective successors and assigns harmless from and against
and in respect of Damages actually suffered, incurred or realized by such party
(collectively, "Buyer Losses"), arising out of or resulting from or relating
to:
(a) any misrepresentation, breach of warranty or breach of
any covenant or agreement made or undertaken by the Seller or the Shareholder
in this Agreement or any misrepresentation in or omission from any other
agreement, certificate, exhibit or writing delivered to the Buyer or
Weatherford pursuant to this Agreement, including the Disclosure Schedule; or
(b) any Retained Liability.
Notwithstanding the foregoing, the Seller and the Shareholder shall not be
liable under clause (a) of this Section 8.1 with respect to a misrepresentation
or breach of warranty unless and until the aggregate amount of any Buyer Losses
for which Buyer and Weatherford are entitled to indemnification pursuant to
such clause from all such Persons exceeds $10,000; provided, however, (i)
liability under clause (b) of this Section 8.1 shall not be so limited and (ii)
liability under clause (a) of this Section 8.1 shall not be so limited if such
Buyer Losses arise from a breach of any of the representations set forth in
Sections 2.1, 2.2, 2.4, 2.6, 2.8, 2.9 or 2.11. For purposes of determining the
Buyer's and Weatherford's right to indemnification for a misrepresentation or
breach of warranty made by the Seller or the Shareholder in this Agreement, all
such representations and warranties that have been made subject to a
materiality qualification shall be deemed to have been made without that
qualification, it being understood that the threshold provided for in the
previous sentence is intended to be the only materiality qualification for
purposes of indemnification. The aggregate liability of the Seller and the
Shareholder under Section 8.1(a) for Buyer Losses arising from a breach of the
representations set forth in this Agreement shall be limited to the Purchase
Price.
8.2 Indemnification by the Buyer and Weatherford. Except as otherwise
limited by this Article 8 and Article 9 hereof, the Buyer and Weatherford
jointly and severally agree to indemnify, defend and hold the Seller, the
Shareholder and each of their respective officers, directors, employees,
agents, shareholders and controlling Persons and successors and assigns
harmless from and against and in respect of Damages actually suffered, incurred
or realized by such party (collectively, "Seller Losses"), arising out of or
resulting from any misrepresentation, breach of warranty or breach of any
covenant or agreement made or undertaken by the Buyer or Weatherford in this
Agreement or any misrepresentation in or omission from any other agreement,
certificate, exhibit or writing delivered to the Seller or the Shareholder
pursuant to this Agreement.
8.3 Procedure. All claims for indemnification under this Article 8
shall be asserted and resolved as follows:
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(a) An Indemnitee shall promptly give the Indemnitor notice
of any matter which an Indemnitee has determined has given or could give rise
to a right of indemnification under this Agreement, stating the amount of the
Losses, if known, and method of computation thereof, all with reasonable
particularity, and stating with particularity the nature of such matter.
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 Indemnitor that could have been actually avoided had such
notice been provided within such required time period.
(b) The obligations and liabilities of an Indemnitor under
this Article 8 with respect to Losses arising from claims of any third party
that are subject to the indemnification provided for in this Article 8 ("Third
Party Claims") shall be governed by and contingent upon the following
additional terms and conditions: if an Indemnitee shall receive notice of any
Third Party Claim, the Indemnitee shall give the Indemnitor prompt notice of
such Third Party Claim and the Indemnitor may, at its option, assume and
control the defense of such Third Party Claim at the Indemnitor's expense and
through counsel of the Indemnitor's choice reasonably acceptable to Indemnitee.
In the event the Indemnitor assumes the defense against any such Third Party
Claim as provided above, the Indemnitee shall have the right to participate at
its own expense in the defense of such asserted liability, shall cooperate with
the Indemnitor in such defense and will attempt to make available on a
reasonable basis to the Indemnitor all witnesses, pertinent records, materials
and information in its possession or under its control relating thereto as is
reasonably required by the Indemnitor. In the event the Indemnitor does not
elect to conduct the defense against any such Third Party Claim, the Indemnitor
shall pay all reasonable costs and expenses of such defense as incurred and
shall cooperate with the Indemnitee (and be entitled to participate) in such
defense and attempt to make available to it on a reasonable basis all such
witnesses, records, materials and information in its possession or under its
control relating thereto as is reasonably required by the Indemnitee. Except
for the settlement of a Third Party Claim that involves the payment of money
only and for which the Indemnitee is totally indemnified by the Indemnitor, no
Third Party Claim may be settled without the written consent of the Indemnitee
or the Indemnitor.
8.4 Payment. Payment of any amounts due pursuant to this Article 8
shall be made in United States dollars in immediately available funds by wire
transfer to a bank account or accounts to be designated by the Indemnitee
within ten Business Days after notice is sent by the Indemnitee.
8.5 Failure to Pay Indemnification. If and to the extent the
Indemnitee shall make written demand upon the Indemnitor for indemnification
pursuant to this Article 8 and the Indemnitor shall refuse or fail to pay in
full within ten Business Days of such written demand the amounts demanded
pursuant hereto and in accordance herewith, then the Indemnitee may utilize any
legal or equitable remedy to collect from the Indemnitor the amount of its
Losses. Nothing contained herein is intended to limit or constrain the
Indemnitee's rights against the Indemnitor for indemnity, the remedies herein
being cumulative and in addition to all other rights and remedies of the
Indemnitee.
8.6 Adjustment of Liability. The amount which an Indemnitee shall be
entitled to receive from an Indemnitor with respect to any indemnifiable Losses
under this Article 8 shall be net of any insurance recovery by the Indemnitee
on account of such Losses from an unaffiliated party.
8.7 Express Negligence. THE INDEMNITIES SET FORTH IN THIS ARTICLE 8
ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE
EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING TEXAS' EXPRESS NEGLIGENCE RULE
OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE 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.
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ARTICLE 9
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 the Seller or the Shareholder pursuant to this Agreement shall be
deemed representations and warranties of the Seller and the Shareholder. All
representations and warranties contained in 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 2.1, 2.2, 2.4, 2.6, 2.8, 2.9, 2.11 and 3.1
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 8 hereof may be made thereon) if
a written notice asserting the claim shall have been duly given in accordance
with Article 8 hereof within the Survival Period with respect to such matter.
All covenants and agreements contained herein shall survive without limitation.
Any claim for indemnification made pursuant to the terms of this Agreement
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 10
TERMINATION
10.1 Termination. The obligation to close the transactions
contemplated by this Agreement may be terminated by:
(a) mutual agreement of the Buyer, Weatherford, the Seller
and the Shareholder:
(b) the Buyer or Weatherford, if a material default shall be
made in the observance or in the due and timely performance by the Seller or
the Shareholder of any agreements and covenants of such Person herein
contained, or if there shall have been a breach by such Person of any of the
warranties and representations of the Seller or the Shareholder herein
contained, and such default or breach has not been cured or has not been
waived;
(c) the Seller or the Shareholder , if a material default
shall be made by the Buyer or Weatherford in the observance or in the due and
timely performance by the Buyer or Weatherford of any agreements and covenants
of such Person herein contained, or if there shall have been a breach by such
Person of any of the warranties and representations of the Buyer or Weatherford
herein contained, and such default or breach has not been cured or has not been
waived;
(d) the Buyer or the Seller (provided the terminating party
has not materially breached any of its agreements, covenants or representations
and warranties) if the Closing shall not have occurred on or before June 30,
1999; or
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(e) by the Buyer or Weatherford if the condition set forth in
Section 6.8 has not been satisfied.
10.2 Liability Upon Termination. If the obligation to close the
transactions contemplated by this Agreement is terminated pursuant to any
provision of Section 10.1 or Section 5.1(b), then this Agreement shall
forthwith become void and there shall not be any liability or obligation with
respect to the terminated provisions of this Agreement on the part of the
Seller, the Shareholder, the Buyer or Weatherford except and to the extent such
termination results from the willful breach by a party of any of its
representations, warranties or agreements hereunder and except that the
termination of this Agreement shall not relieve any party of its obligations
under Section 5.1(c), Article 8 (but only to the extent it applies to breaches
of the warranties made in Section 2.9) and Section 12.7.
10.3 Notice of Termination. The parties hereto may exercise their
respective rights of termination under Section 10.1 and Section 5.1(b) only by
delivering written notice to that effect to the other party or parties, and
such notice is received on or before the Closing Date.
ARTICLE 11
DEFINITIONS OF CERTAIN TERMS
In addition to terms defined elsewhere in this Agreement, the
following terms shall have the meanings assigned to them herein, unless the
context otherwise indicates, both for purposes of this Agreement and all
exhibits hereto and the Disclosure Schedule:
11.1 "Affiliate" shall mean, with respect to any specified Person, a
Person that, directly or indirectly, controls, is controlled by or is under
common control with such specified Person.
11.2 "Agreement" shall mean this Asset Purchase Agreement among the
Seller, the Shareholder, the Buyer and Weatherford, as amended from time to
time by the parties hereto, including the exhibits hereto and the Disclosure
Schedule.
11.3 "Average Closing Price" shall have the meaning given such term in
Section 11.33 hereof.
11.4 "Business Day" shall mean any day other than a Saturday, Sunday
or other day on which commercial banks in Houston, Texas are authorized by law
to close.
11.5 "Buyer" shall mean Grant Prideco, Inc., a Delaware corporation,
or one or more of its designees.
11.6 "Buyer Losses" shall have the meaning given such term in Section
8.1 hereof.
11.7 "Closing" shall mean the transfer by the Seller to the Buyer of
the Transferred Assets and the transfer by the Buyer to the Seller and the
Shareholder of the Purchase Price.
11.8 "Closing Date" shall have the meaning given such term in Section
1.2 hereof.
11.9 "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or similar provisions of legislation replacing such law from
time to time.
11.10 "Common Stock" shall mean the common stock, par value $1.00 per
share, of Weatherford.
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11.11 "Damages" shall mean any and all liabilities, losses, demands,
assessments, claims, costs and expenses (including interest, awards, judgments,
penalties, settlements, fines, costs of remediation, diminutions in value,
costs and expenses incurred in connection with investigating and defending any
claims or causes of action (including, without limitation, attorneys' fees and
expenses and all fees and expenses of consultants and other professionals)).
11.12 "Debt Obligations" shall mean any contract, agreement,
indenture, note or other instrument relating to the borrowing of money or any
guarantee or other contingent liability in respect of any indebtedness or
obligation of any Person, including, without limitation, the carry value of all
capital leases and all non-current liabilities, including deferred income taxes
(other than the endorsement of negotiable instruments for deposit or collection
in the ordinary course of business)
11.13 "Disclosure Schedule" shall mean the disclosure schedule of even
date delivered to the Buyer. The Disclosure Schedule is a part of this
Agreement.
11.14 "Documents and Other Papers" shall mean and include any
document, agreement, instrument, certificate, writing, notice, consent,
affidavit, letter, telegram, telex, statement, file, computer disk, microfiche
or other document in electronic format, schedule, exhibit or any other paper or
record whatsoever.
11.15 "Governmental Entity" shall mean any arbitrator, court,
administrative or regulatory agency, commission, department, board or bureau or
body or other government or authority or instrumentality or any entity or
Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
11.16 "Indemnitee" shall mean the Person or Persons indemnified, or
entitled, or claiming to be entitled to be indemnified, pursuant to the
provisions of Section 8.1 or Section 8.2 hereof, as the case may be.
11.17 "Indemnitor" shall mean the Person or Persons having the
obligation to indemnify pursuant to the provisions of Section 8.1 or Section
8.2 hereof, as the case may be.
11.18 "Lien" shall mean any lien, pledge, claim, charge, security
interest or other encumbrance, option, defect or other rights of any third
Person of any nature whatsoever.
11.19 "Losses" shall mean Seller Losses or Buyer Losses, as the case
may be.
11.20 "Person" shall mean a corporation, an association, a
partnership, an organization, a business, an individual or a Governmental
Entity.
11.21 "Pre-Closing Obligations" shall mean all liabilities, debts and
obligations of the Seller or the Shareholder (including indemnification and
other contingent obligations) relating to (i) acts, events or omissions by any
Person or circumstances existing at or prior to the Closing, (ii) goods or
services provided to or for the benefit of the Seller or any of its Affiliates
prior to the Closing, (iii) goods or services manufactured or provided by or on
behalf of the Seller or any of its Affiliates or licensees prior to the
Closing, (iv) any pending or threatened litigation, claims or disputes made or
threatened prior to the Closing or any litigation, claims or disputes that
arise after Closing and relate in whole or in part to matters occurring on or
prior to Closing, (v) any Retained Liabilities, (vi) the conduct of the
Seller's business, the ownership or operation of the Transferred Assets or any
benefit realized by the Seller or the Shareholder prior to the Closing, (vii)
Debt Obligations of the Seller or the Shareholder, (viii) the employees of the
Seller under any contracts, agreements, arrangements or understandings with
such employees and all other obligations of the
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Seller or any of its Affiliates with respect to its employees, (ix) Taxes, (x)
any matters set forth in the Disclosure Schedule and (xi) any warranty or
product liability claims that are pending, threatened or hereafter arise,
relating to the Transferred Assets or the Orders in Production and any other
goods or services manufactured or provided by or on behalf of the Seller or its
Affiliates prior to the Closing.
11.22 "Purchase Price" shall have the meaning given such term in
Section 1.3 hereof.
11.23 "Retained Liabilities" shall have the meaning given such term in
Section 1.4 hereof.
11.24 "SEC Documents" shall mean Weatherford's (a) Annual Report on
Form 10-K for the year ended December 31, 1998, (b) proxy statement with
respect to the Annual Meeting of Stockholders to be held on May 6, 1999, (c)
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1999,
and (d) Current Report on Form 8-K dated April 29, 1999.
11.25 "Securities Act" shall mean the Securities Act of 1933, as
amended.
11.26 "Seller" shall mean Texas Pipe Works, Inc., a Texas corporation.
11.27 "Seller Losses" shall have the meaning given such term in
Section 8.2 hereof.
11.28 "Taxes" shall mean all federal, state, local, foreign and other
taxes, charges, fees, duties, levies, imposts, customs 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, fees, assessments, customs, duties, levies, imposts,
or charges 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.
11.29 "Tax Returns" shall mean all returns, declarations, reports,
statements and other documents of, relating to, or required to be filed in
respect of, any and all Taxes, and the term "Tax Return" means any one of the
foregoing Tax Returns.
11.30 "Third Party Claims" shall have the meaning given such term in
Section 8.3(b) hereof.
11.31 "Transferred Assets" shall have the meaning given such term in
Section 1.1(a) hereof.
11.32 "US$", "dollar" or "$" shall mean United States dollars.
11.33 "Weatherford Shares" shall mean 59,200 shares of Common Stock;
provided, however, that if the average of the closing sales price per share of
the Common Stock for the five consecutive trading days ending on the third
Business Day immediately preceding the Closing Date, as reported by the New
York Stock Exchange (the "Average Closing Price"), is (i) less than $21.00, the
Weatherford Shares shall mean the number of shares of Common Stock equal to
$1,243,200 divided by the Average Closing Price, or (ii) more than $29.00, the
Weatherford Shares shall mean the number of shares of Common Stock equal to
$1,716,800 divided by the Average Closing Price.
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ARTICLE 12
MISCELLANEOUS
12.1 Spousal Consent. The spouse of the Shareholder is also executing
this Agreement. By executing this Agreement, she (a) acknowledges that she
knows of the contents of this Agreement, (b) consents to the entering into of
this Agreement by her spouse and (c) agrees that this Agreement shall be
binding upon her to the extent of her community property interest.
12.2 Expenses. Except as otherwise set forth herein, and whether or
not the transactions contemplated by this Agreement shall be consummated, each
party agrees to pay, without right of reimbursement from any other party, the
costs incurred by such party incident to the preparation and execution of this
Agreement and performance of its obligations hereunder, including without
limitation the fees and disbursements of legal counsel, accountants and
consultants employed by such party in connection with the transactions
contemplated by this Agreement.
12.3 Notices. All notices, requests, consents, directions and other
instruments and communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered in person, by courier, by overnight delivery service with proof of
delivery or by prepaid registered or certified United States first-class mail,
return receipt requested, addressed to the respective party at the address set
forth below, or if sent by facsimile or other similar form of communication
(with receipt confirmed) to the respective party at the facsimile number set
forth below:
If to the Seller or the Shareholder, to:
TEXAS PIPE WORKS, INC.
P.O. Box 2937
Longview, Texas 75606
Attention: Mark Blanks, Jr.
Facsimile: (903) 297-7095
Confirm: (903) 297-7833
Copies to:
ROBERTS, HILL & CALK, P.C.
2020 Bill Owens Parkway, Suite 200
Longview, Texas 75604
Attention: Jerry W. Hill
Facsimile: (903) 759-2084
Confirm: (903) 759-2020
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If to the Buyer, to:
GRANT PRIDECO, INC.
1450 Lake Robbins Drive, Suite 600
The Woodlands, Texas 77380
Attention: John C. Coble
Facsimile: (713) 693-4484
Confirm: (713) 693-4102
If to Weatherford, to:
WEATHERFORD INTERNATIONAL, INC.
515 Post Oak Blvd., Suite 600
Houston, Texas 77027
Attention: Curtis W. Huff
Facsimile: (713) 693-4484
Confirm: (713) 693-4102
Copies to:
FULBRIGHT & JAWORSKI L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010
Attention: Charles L. Strauss
Facsimile: (713) 651-5246
Confirm: (713) 651-5535
or to such other address or facsimile number and to the attention of such other
Person(s) as either party may designate by written notice. Any notice mailed
shall be deemed to have been given and received on the third Business Day
following the day of mailing.
12.4 Arbitration. In the event there shall exist any dispute or
controversy with respect to this Agreement or any matter relating hereto or the
transactions contemplated hereby, including, but not limited to Article 8, the
parties hereto agree to seek to resolve such dispute or controversy by mutual
agreement. If the parties hereto are unable to resolve such dispute or
controversy by agreement within 60 days following notice by any party hereto of
the nature of such dispute or controversy setting forth in reasonable detail
the circumstances and basis of such dispute or controversy, the parties agree
that such dispute or controversy be resolved by binding arbitration pursuant to
the provisions of this Section 12.4 and in accordance with the then current
Commercial Arbitration Rules of the American Arbitration Association. All
arbitration proceedings shall be held in Houston, Texas. 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 provide written
notice to the electing party naming 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 and shall be independent and not affiliated with any of the
parties hereto. The arbitrators shall resolve all disputes in controversy in
accordance with the Texas substantive law. All statutes of limitations that
would otherwise be applicable shall apply to any arbitration proceeding. The
arbitrators appointed pursuant to this Section 12.4 shall promptly hear and
determine (after due notice and hearing and giving the parties reasonable
opportunity to be heard) the questions submitted,
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and shall render their decision within 60 days after appointment of the third
arbitrator or as soon as practical thereafter. If within such period a decision
is not rendered by the board or a majority thereof, new arbitrators may be
named and shall act hereunder at the election of either party in like manner as
if none had previously been named. The decision of the arbitrators, or a
majority thereof, made in writing, shall absent manifest error be final and
binding upon the parties hereto as to the questions submitted, and each party
shall abide by such decision.
12.5 Successors. Except as specifically contemplated by this
Agreement, no party hereto shall assign this Agreement or any part hereof
without the prior written consent of the other parties; provided, however, the
Buyer may assign its rights and obligations in this Agreement to an Affiliate
of the Buyer. This Agreement shall inure to the benefit of, be binding upon and
be enforceable by the parties hereto and their respective successors and
assigns.
12.6 Entire Agreement. This Agreement and the exhibits hereto and the
Disclosure Schedule constitute the entire agreement and understanding between
the parties relating to the subject matter hereof and thereof and supersedes
all prior representations, endorsements, premises, agreements, memoranda
communications, negotiations, discussions, understandings and arrangements,
whether oral, written or inferred, between the parties relating to the subject
matter hereof. This Agreement may not be modified, amended, rescinded,
canceled, altered or supplemented, in whole or in part, except upon the
execution and delivery of a written instrument executed by a duly authorized
representative of each of the parties hereto.
12.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS WITHOUT
GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES.
12.8 Waiver. The waiver of any breach of any term or condition of this
Agreement shall not be deemed to constitute the waiver of any other breach of
the same or any other term or condition.
12.9 Severability. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.10 No Third Party Beneficiaries. Any agreement contained, expressed
or implied in this Agreement shall be only for the benefit of the parties
hereto and their respective legal representatives, successors and assigns, and
such agreements shall not inure to the benefit of the obligees of any
indebtedness of any party hereto, it being the intention of the parties hereto
that no Person shall be deemed a third party beneficiary of this Agreement,
except to the extent a third party is expressly given rights herein.
12.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.12 Headings. Each statement set forth in the Disclosure Schedule
with respect to a particular section herein shall be deemed made solely with
respect to such section and not with respect to any other section hereof unless
specifically set forth in the Disclosure Schedule as also being made with
respect to such other section. The headings of the Articles and Sections of
this Agreement have been inserted for convenience of reference only and shall
in no way restrict or otherwise modify any of the terms or provisions hereof or
affect in any way the meaning or interpretation of this Agreement.
12.13 Negotiated Transaction. The provisions of this Agreement were
negotiated by the parties hereto.
25
<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
SELLER:
TEXAS PIPE WORKS, INC.
By: /s/ MARK BLANKS, JR.
----------------------------------------
Name: Mark Blanks, Jr.
--------------------------------------
Title: President
-------------------------------------
SHAREHOLDER:
/S/ MARK BLANKS, JR.
--------------------------------------------
MARK BLANKS, JR.
SPOUSE:
/S/ ALANA BLANKS
--------------------------------------------
ALANA BLANKS
BUYER:
GRANT PRIDECO, INC.
By: /s/ CURTIS W. HUFF
----------------------------------------
Name: Curtis W. Huff
--------------------------------------
Title: Vice President and Secretary
-------------------------------------
WEATHERFORD:
WEATHERFORD INTERNATIONAL, INC.
By: /s/ CURTIS W. HUFF
----------------------------------------
Name: Curtis W. Huff
--------------------------------------
Title: Senior Vice President, General Counsel
and Secretary
--------------------------------------
26
<PAGE> 1
EXHIBIT 4.21
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made as of the 5th day of May,
1999 by and among Weatherford U.S., L.P., a Louisiana limited partnership
("Buyer"), Weatherford International, Inc., a Delaware corporation
("Weatherford"), ECD/Northwest, Inc., a Delaware corporation ("Seller"),
Clearwater Holdings, Inc., a Delaware corporation ("CHI"), the individual
shareholders identified on the signature page of the Agreement ("Shareholders"),
and National City Bank of Pennsylvania ("Escrow Agent").
WITNESSETH:
WHEREAS, Buyer is purchasing substantially all of the assets owned by
Seller or utilized in its business pursuant to an Asset Purchase Agreement dated
March 30, 1999 among Buyer, Weatherford, Seller, CHI and the Shareholders (the
"Purchase Agreement"); and
WHEREAS, Seller and the Shareholders have undertaken to indemnify and
hold Buyer and Weatherford harmless with respect to certain claims, liabilities
and obligations arising under the Purchase Agreement; and
WHEREAS, pursuant to the Purchase Agreement, Buyer and Weatherford have
withheld 197,212 shares of Weatherford's common stock payable to Seller in order
to ensure Seller's and the Shareholder's compliance with their indemnification
obligations in the Purchase Agreement; and
WHEREAS, the execution and delivery of this Agreement by the parties
are conditions to the performance of the Purchase Agreement by Buyer and
Weatherford and the payment to Seller of the purchase price for the purchased
assets.
NOW, THEREFORE, in consideration of the mutual promises herein and
other good and valuable consideration, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Appointment. Buyer and Seller hereby appoint National
City Bank of Pennsylvania as escrow agent to act in accordance with the terms
and conditions of this Agreement, and Escrow Agent hereby accepts such
appointment in accordance with such terms and conditions.
2. Representations and Warranties.
(a) Buyer represents and warrants to Seller and
Escrow Agent that (i) it is validly existing and in good standing as a limited
partnership under the laws of the State of
<PAGE> 2
Louisiana, and (ii) this Agreement has been duly and validly authorized,
executed and delivered by Buyer and constitutes its valid, binding and
enforceable obligation, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect that affect creditors' rights generally and by legal and
equitable limitations on the availability of specific remedies.
(b) Weatherford represents and warrants to Seller and
Escrow Agent that (i) it is validly existing and in good standing as a
corporation under the laws of the State of Delaware, and (ii) this Agreement has
been duly and validly authorized, executed and delivered by Weatherford and
constitutes its valid, binding and enforceable obligation, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect that
affect creditors' rights generally and by legal and equitable limitations on the
availability of specific remedies.
(c) Seller and CHI represent and warrant to Buyer and
Escrow Agent that (i) they are each duly organized, validly existing and in good
standing as a corporation under the laws of the State of Delaware, and (ii) this
Agreement has been duly and validly authorized, executed and delivered by each
of Seller and CHI and constitutes a valid, binding and enforceable obligation of
each of Seller and CHI.
3. Deposit of Weatherford Shares. On the Closing Date,
Buyer shall deliver to Escrow Agent 197,212 shares of the Weatherford Shares
(the "Escrow Shares") registered in the name of Escrow Agent or its nominee.
Escrow Agent shall hold the Escrow Shares, and all dividends and distributions
thereon and all proceeds therefrom (collectively, the "Escrow Funds"), pursuant
to the terms of this Agreement to secure Seller's and the Shareholders'
indemnification obligations under Article 8 of the Purchase Agreement. Escrow
Agent shall have no duty to enforce the foregoing indemnification obligations.
4. Sale of Escrow Shares. The parties recognize and
agree that the Escrow Shares are not registered under the Securities Act of
1933, as amended (the "Securities Act") as of the date of this Agreement, and
consequently the certificates for the Escrow Shares shall be imprinted with a
legend (the "Restrictive Legend") restricting the transfer of such shares. Until
such time as the Escrow Agent receives a Joint Written Instruction (as
hereinafter defined) that the Escrow Shares either have been registered by
Weatherford under the Securities Act or may be transferred pursuant to Rule 144
promulgated pursuant to the Securities Act or pursuant to another exemption from
registration (a "Transfer Notice"), the Escrow Agent shall hold the Escrow
Shares and shall not sell or otherwise transfer the same, except to one or more
of the parties in accordance with Section 8 hereof.
5. Investment of Escrow Funds. Subject to the Escrow
Agent's receipt of a Transfer Notice as described in Section 4 above, Seller
shall direct the Escrow Agent's investment of the Escrow Funds, by written
notice signed by Kevin W. Smith (the "Seller Representative"). Seller may change
the identity of the Seller Representative at any time by a notice signed by each
of the Shareholders. Such notice shall be effective upon its receipt by the
Escrow Agent and Buyer. For any matter in which the Escrow Agent, Weatherford or
Buyer is entitled to rely on or otherwise deal with Seller, CHI or any of the
Shareholders, the Escrow
2
<PAGE> 3
Agent, Weatherford or Buyer, as applicable, shall be entitled to communicate
solely with the Seller Representative and shall be entitled to rely on any such
communications as being the desire and will of Seller, CHI and the Shareholders.
Notice delivered to the Seller Representative in accordance with Section 15
hereof shall be deemed notice to the Seller, CHI and each of the Shareholders.
The Escrow Funds shall be invested solely in Permitted
Investments (as hereinafter defined), provided that the Weatherford Shares, and
all noncash dividends or distributions thereon, shall be retained in kind except
to the extent that the Seller Representative directs their sale and reinvestment
in Permitted Investments. As used herein, "Permitted Investments" means:
(a) marketable obligations of, or marketable
obligations fully and directly guaranteed by, the United States;
(b) repurchase obligations with a term of not more
than ten (10) days for underlying securities of the types described in clause
(a) entered into with any bank organized under the laws of the United States or
any State thereof, the commercial paper of which bank is rated A-2 or better by
Standard & Poor or P-2 or better by Moody's Investors Service, Inc;
(c) certificates of deposit issued by any bank
described in clause (b), including the bank acting as Escrow Agent; or
(d) any mutual fund, money market fund or short-term
investment fund, the portfolio of which is limited to obligations described in
clauses (a) and (b) above, including funds from which the Escrow Agent, or an
affiliate of the Escrow Agent, earns an investment advisory fee. . The Escrow
Agent shall have no obligation or authority to sell, invest or reinvest the
Escrow Funds in the absence of instructions from the Seller Representative.
6. Distributions on Escrow Funds. All dividends and
distributions, and proceeds of investments and reinvestments, received by the
Escrow Agent with respect to the Escrow Funds shall become and remain part of
the Escrow Funds until disbursed in accordance with Section 8 hereof.
7. Voting Rights of Shares in Escrow. All voting rights
with respect to any securities comprising a part of the Escrow Funds may be
exercised by Seller, and the Escrow Agent shall, as necessary, execute and
deliver to Seller such proxies, consents or other documents as may be necessary
to enable Seller to exercise such rights.
8. Release of Escrow Funds. Escrow Agent will hold the
Escrow Funds in its possession until their disbursement from time to time
pursuant to the following:
3
<PAGE> 4
(a) Upon receipt of Joint Written Instructions or an
Arbitration Order (as such terms are defined in Section 8(d)), Escrow Agent
shall pay to the persons or entities referred to therein the amounts so
indicated, but no more than the total amount of the Escrow Funds. Any such
payment shall be made within three (3) Banking Days (as hereinafter defined)
following receipt of the relevant Joint Written Instructions or Arbitration
Order. The Escrow Agent is authorized, if necessary, to cause American Stock
Transfer & Trust Company, the transfer agent and registrar for Weatherford's
common stock, to exchange certificates representing the Escrow Shares for
certificates of different denominations in order to make any such payment.
(b) Subject to Section 8(a), and unless otherwise
directed by Joint Written Instructions or Arbitration Order, Escrow Agent shall
distribute to Sellers, within three (3) Banking Days after the second
anniversary of the Closing Date, that portion of the Escrow Funds that exceeds
the aggregate amount of all outstanding or unsettled Purchaser Claims, or if no
outstanding or unsettled Purchaser Claims exist, all of the Escrow Funds.
(c) Buyer or Weatherford shall establish a "Purchaser
Claim" by providing a written notice to Escrow Agent (with a copy to the Seller
Representative) including (i) a description in reasonable detail of the claim
for which indemnity is sought under the Purchase Agreement and (ii) a statement
of the specified amount of such claim or a statement that no such amount is
reasonably determinable. Within thirty (30) days after the provision of an
initial Purchaser Claim that does not specify the amount of such claim, Buyer or
Weatherford shall provide written notice of its good faith estimate of the
maximum amount of such claim to Escrow Agent (with a copy to the Seller
Representative). Buyer or Weatherford may amend the specified amount or any
estimate of the maximum amount of any claim at any time by written notice to
Escrow Agent (with a copy to the Seller Representative), provided, however, in
the event Buyer amends the amount or estimate of any such claim, Buyer shall
provide with such estimate a description in reasonable detail of the reasons for
such amendment. Solely for purposes of Section 8(b), the amount of a Purchaser
Claim shall equal the specified or maximum amount contained in the most recent
written notice received by Escrow Agent pursuant to this subsection (c) or, if
no notice containing a specified or maximum amount has been received, (x) for
the first sixty (60) days after the initial provision of such Purchaser Claim,
the entire amount of the remaining Escrow Funds and (y) thereafter, unless and
until such notice is received, zero (0). The aggregate amount of all Purchaser
Claims shall be reduced by the payments thereof as well as the reductions
thereof specified in all Joint Written Instructions or Arbitration Orders
delivered to Escrow Agent. Buyer shall act in good faith in specifying the
foregoing amounts and in making the foregoing estimates.
(d) For purposes of this Agreement, the following
definitions shall apply:
(i) "Joint Written Instructions" means
written instructions executed by Buyer and the Seller Representative directed to
Escrow Agent in accordance with Section 15 hereof.
4
<PAGE> 5
(ii) "Arbitration Order" means an order,
decree or judgment of a panel of arbitrators issued pursuant to Section 12.4 of
the Purchase Agreement.
(iii) "Banking Day" means any day other than
a Saturday, Sunday or other day on which commercial banks in Pittsburgh,
Pennsylvania are authorized by law to close.
9. Selection of Escrow Funds. In making payment pursuant
to Section 8(a), Escrow Agent shall designate the items of Escrow Funds to be
used, resorting first, to the extent available, to Escrow Shares, unless a
specific designation is directed in a writing signed by the Seller
Representative and received by Escrow Agent on or before its receipt of the
applicable Joint Written Instructions or Arbitration Order. For purposes of this
Section 9, the Escrow Shares or any other securities listed on a national
securities exchange shall be valued at the average of the closing sales price of
such securities for the five (5) consecutive trading days ending on the Banking
Day immediately preceding the day the Joint Written Instructions or Arbitrator
Order was received by Escrow Agent, as reported by such exchange. Other property
shall be valued as reasonably determined by the Escrow Agent, in good faith.
10. Indemnification of Escrow Agent.
(a) Escrow Agent will have no duties or
responsibilities other than those expressly set forth herein. Escrow Agent will
have no duty to enforce any obligation of any person or entity, other than
Escrow Agent, to make any payment or delivery not expressly set forth herein or
to direct or enforce any obligation of any person to perform any other act.
Escrow Agent will be under no liability to anyone due to any failure of any
party other than Escrow Agent to perform its obligations. Except for this
Agreement and instructions given to Escrow Agent pursuant to its terms, Escrow
Agent will not be obligated to recognize any agreement between or among any of
the parties hereto (other than Escrow Agent), notwithstanding its knowledge
thereof.
(b) Escrow Agent will not be liable for any action
taken or omitted by it, or any action suffered by it to be taken or omitted, in
good faith and in the exercise of its own best judgment, and may rely
conclusively and will be protected in acting upon any order, notice, demand,
certificate, opinion or advice of counsel, statement, instrument, report or
other paper or document that Escrow Agent reasonably believes to be genuine and
to be signed or presented by the proper person or persons.
(c) Escrow Agent will be indemnified and held
harmless jointly and severally by Seller and the Shareholders from and against
any expenses, including reasonable counsel fees and disbursements, claims,
damages or losses suffered by Escrow Agent in connection with any claim or
demand, which, in any way, directly or indirectly, arises out of or relates to
this Agreement, unless Escrow Agent is guilty of willful misconduct, fraud or
gross negligence under this Agreement. Promptly after the receipt by Escrow
Agent of notice of any such demand or claim or the commencement of any action,
suit or proceeding relating thereto, Escrow Agent will notify the other parties
hereto in writing. Seller and the Shareholders shall have the right to defend
any such action, suit or proceeding at their expense.
5
<PAGE> 6
11. Compensation of Escrow Agent. Seller will pay the
fees due to Escrow Agent hereunder, as set forth on SCHEDULE A attached hereto.
The Escrow Agent hereby waives any right of set-off that it now or hereafter may
have with respect to the Escrow Funds.
12. Termination of Agreement and Resignation of Escrow
Agent.
(a) This Agreement will terminate on the date of the
final disbursement of the Escrow Funds, except for Sections 10, 14, 15, 17 and
18 hereof, which will survive such disbursement without limitation.
(b) At any time, upon thirty (30) days prior notice
to each of the other parties hereto, Escrow Agent may resign and be discharged
from its duties as Escrow Agent hereunder. As soon as practicable after its
resignation, Escrow Agent will promptly turn over to a successor escrow agent
mutually appointed by the other parties hereto all monies and property held
hereunder upon presentation of a document appointing the new escrow agent and
its acceptance thereof. The parties agree to execute with any such new escrow
agent an agreement substantially in the form of this Agreement.
13. Distributions by the Escrow Agent. Escrow Agent
shall make all cash payments in excess of Five Hundred Dollars ($500.00) to
Buyer or Seller hereunder by wire transfer pursuant to the recipient's
instructions, unless otherwise directed by the recipient. Payments of Five
Hundred Dollars ($500.00) or less may be made by the Escrow Agent by check.
14. Records. Escrow Agent will maintain accurate records
of all transactions hereunder. Promptly after the termination of this Agreement
pursuant to Section 12 hereof, or as may reasonably be required by Buyer or
Seller from time to time before such termination, Escrow Agent will provide
Buyer and Seller with a complete copy of such records, certified by Escrow Agent
to be a complete and accurate account of all such transactions. Buyer and
Seller, and their duly authorized representatives, will also have access to such
books and records at all reasonable times during normal business hours upon
reasonable notice to Escrow Agent.
15. Notices. All notices, communications and instructions
required or desired to be give under this Agreement must be in writing (except
for investment instructions) and will be deemed to be duly given when received
(or tendered, if delivery is refused by the recipient) if sent by registered or
certified mail, return receipt requested, or overnight courier to the following
addresses:
To Escrow Agent: National City Bank of Pennsylvania
Institutional Trust
20 Stanwix Street, 16th Floor
Pittsburgh, PA 15222-4802
Attn: John C. Hoffman
Assistant Vice President
6
<PAGE> 7
To Buyer or Weatherford U.S., L.P.
Weatherford: 515 Post Oak Blvd., Suite 600
Houston, TX 77027
Attn: Curtis W. Huff
To Seller Kevin W. Smith
Representative: 103 Fairway Road
McMurray, PA 15317
To Seller or CHI: Clearwater Holdings, Inc.
5605 Grand Avenue
Pittsburgh, PA 15225
Attn: Patrick D. Dugan
To Shareholders: Kevin W. Smith
103 Fairway Road
McMurray, PA 15317
Todd R. Thomas
2 Bough Leaf Lane
The Woodlands, TX 77381
Ted M. Wilkes
1970 Duncan Avenue
Allison Park, PA 15101
James E. Wilkes
1053 Greensview Drive
Wooster, OH 44691
Copies to: Houston Harbaugh, P.C.
12th Floor, Two Chatham Center
Pittsburgh, PA 15219
Attn: Thomas J. Miller
or to such other address and to the attention of such other person as any of the
above may have furnished to the other parties in writing and delivered in
accordance with the provisions set forth above.
16. Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall together constitute a single document.
The parties may execute more than one copy of this Agreement, in which case each
executed copy shall constitute an original.
17. Assignment and Modification. None of the parties
hereto may assign this Agreement or any right or interest hereunder without the
prior written consent of the other
7
<PAGE> 8
parties hereto. Subject to the foregoing, this Agreement will be binding upon
and inure to the benefit of each of the parties hereto and their respective
heirs, successors and permitted assigns. No other person will acquire or have
any rights under, or by virtue of, this Agreement. This Agreement may be changed
or modified only in a writing signed by all of the parties hereto.
18. Choice of Law; Headings. This Agreement will be
governed by and construed in accordance with the laws of the Commonwealth of
Pennsylvania. Headings in this Agreement are for reference purposes only and
shall not limit or otherwise affect any of the terms hereof.
19. Taxes. All interest, income and gains on the
Escrow Funds shall be allocated to Seller for purposes of reporting to the
Internal Revenue Service and state and local Governmental Entities.
20. Merger of Escrow Agent. Any corporation into which
the Escrow Agent in its individual capacity may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Escrow Agent in its individual capacity
shall be a party, or any corporation to which substantially all the corporate
trust business of the Escrow Agent in its individual capacity may be
transferred, shall be the Escrow Agent under this Agreement without further act.
21. Conformity to Purchase Agreement. As between all
parties hereto other than the Escrow Agent, in the event of conflict or
inconsistency between the terms of this Agreement and the terms of the Purchase
Agreement, the terms of the Purchase Agreement shall control.
22. Definitions. All capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Purchase
Agreement.
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
officer, have executed this Agreement on the date first above written.
BUYER: WEATHERFORD:
WEATHERFORD U.S., L.P. WEATHERFORD INTERNATIONAL, INC.
By: Weatherford Holding U.S., Inc.,
its general partner
By: /s/ CURTIS W. HUFF
Name: Curtis W. Huff
By: /s/ CURTIS W. HUFF Title: Senior Vice President
Name: Curtis W. Huff
Title: Senior Vice President
8
<PAGE> 9
SHAREHOLDERS: ESCROW AGENT:
NATIONAL CITY BANK OF PENNSYLVANIA
/s/ KEVIN W. SMITH
Kevin W. Smith By: /s/ JOHN C. HOFFMAN
Name: John C. Hoffman
Title: Asst. Vice President
/s/ TODD R. THOMAS
Todd R. Tomas
/s/ TED M. WILKES
Ted M. Wilkes
/s/ JAMES E. WILKES
James E. Wilkes
ECD/NORTHWEST, INC.
By: /s/ KEVIN W. SMITH
Name: Kevin W. Smith
Title: CEO
CLEARWATER HOLDINGS, INC.
By: /s/ KEVIN W. SMITH
Name: Kevin W. Smith
Title: CEO
9
<PAGE> 10
SCHEDULE A
Escrow Agent's Fees
As long as this Escrow Agreement remains in effect and the Escrow Agent
continues to serve hereunder, the Escrow Agent shall be entitled to the
following fees:
Acceptance Fee of $1,000, payable within sixty (60) days
following the date of this Escrow Agreement.
Annual Fees as follows:
o Initial annual fee of $2,000, payable within
sixty (60) days following the date of this
Escrow Agreement.
o Subsequent annual fees of $2,000 each, payable
on each succeeding anniversary of the due date
of the initial annual fee.
<PAGE> 1
EXHIBIT 5.1
[Weatherford International, Inc. Letterhead]
June 8, 1999
Weatherford International, Inc.
515 Post Oak Boulevard, Suite 600
Houston, Texas 77027
Ladies and Gentlemen:
I am Senior Vice President, General Counsel and Secretary of
Weatherford International, Inc., a Delaware corporation (the "Company"), and
have acted as counsel for the Company in connection with the registration under
the Securities Act of 1933 of 446,838 shares of the Company's common stock,
$1.00 par value (the "Shares"), to be offered by certain selling stockholders of
the Company (the "Selling Stockholders") upon the terms and subject to the
conditions set forth in the Company's Registration Statement on Form S-3
covering the Shares (the "Registration Statement") filed with the Securities and
Exchange Commission.
In connection therewith, I have examined the Registration Statement,
originals or copies certified or otherwise identified to my satisfaction of the
Amended and Restated Certificate of Incorporation, as amended, of the Company,
the amended By-laws of the Company, the corporate proceedings with respect to
the offering of the Shares and such other documents and instruments as I have
deemed necessary or appropriate for the expression of the opinions contained
herein.
I have assumed the authenticity and completeness of all records,
certificates and other instruments submitted to me as originals, the conformity
to original documents of all records, certificates and other instruments
submitted to me as copies, the authenticity and completeness of the originals of
those records, certificates and other instruments submitted to me as copies and
the correctness of all statements of fact contained in all records, certificates
and other instruments that I have examined.
Based on the foregoing, and having regard for such legal considerations
as I have deemed relevant, I am of the opinion that the Shares proposed to be
offered by the Selling Stockholders have been duly and validly authorized for
issuance and are duly and validly issued, fully paid and nonassessable.
The opinions expressed herein relate solely to, are based solely upon
and are limited exclusively to the General Corporation Law of the State of
Delaware and the federal laws of the United States of America, to the extent
applicable, and I am expressing no opinion as to the effect of the laws of any
other jurisdiction.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name under the caption "Legal
Matters" in the Prospectus included as part of the Registration Statement.
Very truly yours,
/s/ Curtis W. Huff
Curtis W. Huff
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our report dated
February 17, 1999 included in Weatherford International, Inc.'s Form 10-K for
the year ended December 31, 1998, and to all references to our Firm included in
this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Houston, Texas
June 8, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of Weatherford
International, Inc. for the registration of 446,838 shares of its common stock
and to the incorporation by reference therein of our report dated March 29,
1999, with respect to the consolidated balance sheets of Dailey International
Inc. as of December 31, 1998 and 1997, and the related consolidated statements
of operations, stockholders' equity, and cash flows for the year ended December
31, 1998, the eight month period ended December 31, 1997 and for each of the
two years in the period ended April 30, 1997, included in Weatherford
International, Inc.'s Form 8-K dated May 21, 1999.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
Houston, Texas
June 7, 1999
