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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported)
May 31, 1996
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-18312 76-0252850
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2835 Holmes Road, Houston, Texas 77051
(Address of principal executive offices) (Zip Code)
(713) 799-5100
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Total Number of Pages: 64
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Exhibit Index Located at Page 4
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 31, 1996, pursuant to that certain Share Purchase Agreement dated
as of May 31, 1996 (a copy of which is attached hereto as Exhibit 2.1),
Tuboscope Vetco International Corporation (the "Company"), through its
subsidiaries, acquired all of the outstanding shares of capital stock of Wadeco
Oilfield Services Ltd. ("Wadeco") for an aggregate purchase price of $21.6
million. The aggregate purchase price was comprised of the assumption of $5.2
million of Wadeco debt and cash of $16.4 million (provided from the Company's
cash reserves and its existing revolving credit facility).
Wadeco owns and operates a fleet of 137 centrifuges and various other
pieces of solids control equipment, which it rents to oil and gas operators and
drilling contractors across western Canada, Newfoundland, Nova Scotia and North
Dakota. Wadeco is based in Leduc, Alberta, with offices in Calgary, Grande
Prairie and Estevan, Saskatchewan.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Wadeco Oilfield Services, Ltd.
It is impracticable to provide the required financial statements at
the time of the filing of this report. The required financial statements
will be filed within 60 days.
(b) Pro Forma Financial Information.
It is impracticable to provide the required pro forma financial
information at the time of the filing of this report. The required pro
forma financial information will be filed within 60 days.
(c) Exhibits.
2.1 Share Purchase Agreement dated as of May 31, 1996 between TVI Wadeco
Inc., J & S Hokanson Investments Ltd., John Hokanson, Douglas Bell,
Robert Russell, Richard Rutherford and Wadeco Oilfield Services Ltd.
99.1 Text of Press Release, dated June 3, 1996.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
Date: June 14, 1996 By: /s/ Joseph C. Winkler
-------------------------------------------------
Joseph C. Winkler
Executive Vice President, Chief Financial Officer
and Treasurer
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EXHIBIT INDEX TO FORM 8-K
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description Numbered Page
<S> <C> <C>
2.1 Share Purchase Agreement dated as of 6
May 31, 1996 between TVI Wadeco Inc.,
J & S Hokanson Investments
Ltd., John Hokanson, Douglas Bell,
Robert Russell, Richard Rutherford
and Wadeco Oilfield Services Ltd.
99.1 Text of Press Release, dated June 3, 1996. 63
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EXHIBIT 2.1
5
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SHARE PURCHASE AGREEMENT
BETWEEN
TVI WADECO INC.
- AND -
J & S HOKANSON INVESTMENTS LTD.
- AND -
JOHN HOKANSON
- AND -
DOUGLAS BELL
- AND -
ROBERT RUSSELL
- AND -
RICHARD RUTHERFORD
- AND -
WADECO OILFIELD SERVICES LTD.
DATED AS OF
MAY 31, 1996
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SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT made as of the 31st day of May, 1996.
BETWEEN:
TVI WADECO INC., a corporation organized under the laws of the
Province of Alberta (hereinafter called the "Purchaser")
OF THE FIRST PART,
-and-
J & S HOKANSON INVESTMENTS LTD., a corporation organized under the
laws of the Province of Alberta (hereinafter called the "Vendor")
OF THE SECOND PART,
- and -
JOHN HOKANSON, an individual resident in the City of Edmonton,
Alberta (hereinafter called "Hokanson")
OF THE THIRD PART,
- and -
DOUGLAS BELL, an individual resident in the City of Edmonton,
Alberta (hereinafter called "Bell")
OF THE FOURTH PART,
- and -
ROBERT RUSSELL, an individual resident in the City of Calgary,
Alberta (hereinafter called "Russell")
OF THE FIFTH PART,
- and -
RICHARD RUTHERFORD, an individual resident of Rollyview, Alberta
(hereinafter called "Rutherford")
OF THE SIXTH PART
- and -
WADECO OILFIELD SERVICES LTD., a corporation incorporated under the
laws of the Province of Alberta ("Wadeco")
OF THE SEVENTH PART
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SHARE PURCHASE AGREEMENT
WHEREAS Wadeco and the Subsidiaries (as hereinafter defined) are engaged
in the business of providing rental services, selling equipment, parts and
consumables, equipment transportation, installation, supervision and repair
services for a wide range of solids/liquids separation and dewatering systems in
the Canadian and United States drilling market;
AND WHEREAS Hokanson, Bell, Russell and Rutherford (collectively referred
to as the "Former Shareholders") are, or will be following Closing (as
hereinafter defined), former shareholders, directly or indirectly, of Wadeco or
one of the Subsidiaries (as hereinafter defined) and have been actively involved
in the business of Wadeco and/or one of the Subsidiaries;
AND WHEREAS Wadeco, The Vendor, the Subsidiaries and the Former
Shareholders will complete the Reorganization as part of the Closing of the
transactions contemplated herein;
AND WHEREAS the Purchaser desires to purchase all of the shares of Wadeco
and the Vendor desires to sell to the Purchaser, an aggregate of 15,548 Common
shares of Wadeco, on the terms and conditions set forth herein;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual promises contained herein and for other good and valuable consideration
(including without limitation, the consideration received in connection with the
Reorganization), the receipt and sufficiency of which is acknowledged, the
parties hereby agree as follows:
SECTION 1.
DEFINITIONS
A. DEFINED TERMS
As used in this Agreement, the following terms have the following
meanings:
"AFFILIATE" means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"AGREEMENT" means this Share Purchase Agreement, as amended, supplemented or
otherwise modified from time to time, including the Schedules and Exhibits
hereto.
"APPLICABLE LAWS" includes all applicable securities, corporate and other laws,
rules, regulations, notices and policies.
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"ASHTIN DEVELOPMENTS" means Ashtin Developments Ltd.
"ASSETS" means all of the assets, books, records, operations and business and
related data, technology and know-how of Wadeco and the Subsidiaries of every
nature, kind and description including, without limitation:
(a) all fixtures, machinery, equipment, computers, workstations,
centrifuges, pumps, ancillary tanks, driers, tools, motors,
vehicles, tractors, trailers, cranes, tanks, shaker screens,
flowline cleaners, generators, transformers, matting, furniture,
office supplies, shop supplies, tooling and other tangible property
owned by Wadeco and the Subsidiaries, wherever located
("Equipment");
(b) all inventory, packing material, raw materials, parts, work in
progress and finished, tools and other products other than
Equipment;
(c) all accounts receivable ("Accounts Receivable");
(d) all of the books and records of Wadeco and the Subsidiaries relating
to their businesses, wherever located, whether printed or
electronic, including without limitation records stored as computer
databases or in any other manner, all customer, supplier, dealer and
other similar lists, sales and other records relating to the
business of Wadeco and the Subsidiaries, together with all of their
technical data and information, prints, sketches, drawings,
specifications, work standards, manufacturing and process
information, bills and material, sales brochures, manuals and
related materials relating to the business of Wadeco and the
Subsidiaries;
(e) all claims of Wadeco or the Subsidiaries against third parties,
including without limitation unliquidated rights under
manufacturers' repairers' or vendors' warranties or guarantees;
(f) all Intellectual Property;
(g) all benefits under any agreement, order, license, agreement,
instrument or similar arrangement;
(h) all transferable licenses, permits and authorizations of
Governmental Authorities and private parties relating to the use,
operation or enjoyment of the business and Assets of Wadeco and the
Subsidiaries;
(i) all real property of Wadeco and the Subsidiaries and all
improvements and fixtures thereon, including without limitation, the
Leduc Properties;
(j) all insurance policies, rights to proceeds of claim made under any
insurance policy and rights to receive refunds or credits with
respect to insurance premiums related to such insurance policies;
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(k) all goodwill relating to the businesses of Wadeco and the
Subsidiaries;
(l) all cash, notes, prepaid expenses, prepaid taxes and tax credits and
other similar assets;
(m) the corporate seal, minute books, constating documents and such
other books and records as pertain to the corporate organization,
existence or share capitalization of Wadeco and the Subsidiaries;
(n) the right, title and interest in the corporate name "Wadeco
Dewatering Services Ltd."; and
(o) all other assets, tangible and intangible, in any way related to
Wadeco, the Subsidiaries and their respective businesses;
including, but not limited to, the assets set forth in Schedule 1.1(a).
"CLOSING" has the meaning ascribed thereto in Section 3.1.
"CLOSING FINANCIAL STATEMENTS" means the consolidated balance sheet and
consolidated statement of income and retained earnings as of and for the twelve
month period ended April 30, 1996 for Wadeco and the Subsidiaries prepared as if
the Subsidiaries were a wholly owned subsidiary of Wadeco as of May 1, 1995, and
adjusted for the Non-Recurring Transactions, which statements are attached as
Exhibit 1.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON CONTROL WITH"),
with respect to the relationship between or among two or more Persons, means the
possession, directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the affairs or management of a Person, whether
through the ownership of voting securities, as trustee or executor, by contract
or otherwise, including, without limitation, the ownership, directly or
indirectly, of securities having the power to elect a majority of the board of
directors or similar body governing the affairs of such Person.
"D&D ENTERPRISES" means D&D Bell Enterprises Inc.
"DECEMBER FINANCIAL STATEMENT" means the consolidated balance sheet and
consolidated statement of income and retained earnings as of and for the eight
month period ended December 31, 1995 for Wadeco and the Subsidiaries prepared as
if the Subsidiaries were a wholly owned subsidiary of Wadeco as of May 1, 1995,
and adjusted for the Non-Recurring Transactions, which statements are attached
as Exhibit 2.
"DEWATERING" means Wadeco Dewatering Services Ltd.
"EFFECTIVE DATE" means May 1, 1996.
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"EMPLOYEE PLAN" means any plan, contract, commitment, program, policy, pension
plan, arrangement or practice maintained or contributed to by the Person
providing benefits or rights to any employee, former employee, director,
officer, consultant or agent of the Person, including, without limitation:
(a) any profit-sharing, deferred compensation, bonus, stock option, stock
purchase, pension, retainer, consulting, retirement, severance,
employment, welfare or incentive plan, contract, agreement, commitment,
program, policy, arrangement or practice; and
(b) any plan, contract, commitment, program, policy, arrangement or
practice providing for "fringe benefits" or perquisites including,
without limitation, benefits relating to automobiles, clubs, vacation,
child care, parenting, sabbatical or sick leave and medical, dental,
hospitalization, life insurance and other types of insurance.
"ENVIRONMENTAL DEFICIENCY" means any:
i. ground water, surface water or aquifer contamination;
ii. soil contamination;
iii. toxic or hazardous substance emission;
iv. corrosion or deterioration of structures, equipment or other
property, other than that caused by exposure to the air in the
ordinary course; or
v. damage, injury or death caused by any of the foregoing;
that constitutes a violation or contravention of Environmental Laws, results in
a governmental or regulatory request or order to remedy under Environmental
Laws, gives rise to a civil right of action or would constitute, result or give
rise with notice or the passage of time.
"ENVIRONMENTAL LAW" means any law, bylaw, rule, regulation, policy, or other
legislation of any kind, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, written request,
consent decree or judgment or any provision or condition of any permit, license
or other operating authorization relating to the protection of the environment,
health, safety or natural resources, including, without limitation, those
relating to the manufacture, use, handling, transportation, treatment, storage,
disposal, release, emission or discharge of chemical raw materials, pollutants,
contaminants or toxic, corrosive, hazardous or non-hazardous substances or
waste.
"EXCLUDED TRANSACTIONS" means the transactions set forth in Exhibit 5.
"EXCLUDED TRANSACTIONS DOCUMENTS" means the contracts, agreements,
acknowledgments, or other documents of any kind created or entered into in
connection with or incidental to the Excluded Transactions.
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"GAAP" means generally accepted accounting principles as recognized from time to
time by the Canadian Institute of Chartered Accountants or any applicable
successor institution.
"GOVERNMENTAL AUTHORITY" means any government, any political subdivision, any
agency and any entity or Person exercising executive, legislative, judicial,
regulatory or administrative functions of government.
"HAZARDOUS MATERIALS" means:
(a) any petroleum or petroleum products, by-products or breakdown
products, geothermal products, natural gas, flammable explosives,
radioactive materials, urea formaldehyde foam insulation, and
material containing asbestos or polychlorinated biphenyls, and
(b) any other chemicals, materials or substances prohibited, limited or
regulated under any applicable Environmental Law, or present in
concentrations or at locations that present a threat to human health
or the environment.
"INDEBTEDNESS" means, with respect to any Person,
(a) all indebtedness of such Person, whether or not contingent, for
borrowed money,
(b) all obligations of such Person for the deferred purchase price of
property or services,
(c) all obligations of such Person evidenced by notes, bonds, debentures
or other similar instruments,
(d) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired by
such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to
repossession or sale of such property),
(e) all obligations of such Person as lessee under leases that have been
or should be, in accordance with GAAP, recorded as capital leases,
(f) all obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities,
(g) all obligations of such Person to purchase, redeem, retire, defease
or otherwise acquire for value any capital stock of such Person or
any warrants, rights or options to acquire such capital stock,
valued, in the case of redeemable preferred stock, at the greater of
its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends,
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(h) all Indebtedness of others referred to in clauses (a) through (f)
above guaranteed directly or indirectly in any manner by such
Person, or in effect guaranteed directly or indirectly by such
Person through an agreement (i) to pay or purchase such Indebtedness
or to advance or supply funds for the payment or purchase of such
Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose
of enabling the debtor to make payment of such Indebtedness or to
assure the holder of such Indebtedness against loss, (iii) to supply
funds to or in any other manner invest in the debtor (including any
agreement to pay for property or services irrespective of whether
such property is received or such services are rendered) or (iv)
otherwise to assure a creditor against loss, and
(i) all Indebtedness referred to in clauses (a) through (f) above
secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien
on property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness.
"INTELLECTUAL PROPERTY" means all intellectual property of any kind of Wadeco or
the Subsidiaries, including but not limited to:
(a) any patent disclosures, whether or not reduced to practice and
whether or not yet made the subject of a pending patent application
or applications,
(b) national (including, without limitation, Canada and the United
States) and multinational statutory invention registrations,
patents, patent registrations and patent applications (including,
without limitation, all reissues, divisions, continuations,
continuations in part, extensions and reexaminations) and all rights
therein provided by international treaties or conventions and all
improvements to the inventions disclosed in each such registration,
patent or application,
(c) trademarks, service marks, trade dress, get-up, logos, trade names
and corporate names, whether or not registered, including, without
limitation, all marks registered in the trade mark offices or
authorities of all nations throughout the world, and all rights
therein provided by international treaties and conventions,
(d) copyrights (registered or otherwise) and registrations and
applications for registration thereof, and all rights therein
provided by international treaties or conventions,
(e) computer software, including, without limitation, source codes,
operating systems and specifications, data, databases, files,
documentation and other materials related thereto,
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(f) trade secrets and confidential, technical and business information
(including, without limitation, formulas, compositions, inventions
and conceptions of inventions whether patentable or unpatentable and
whether or not reduced to practice),
(g) all rights to obtain and rights to apply for patents, and to
register trademarks and copyrights,
(h) all rights and benefits to any software license arrangements or
agreements with any third parties, and
(i) all rights to sue or recover and retain damages and costs and legal
fees and to obtain injunctive relief for present and past
infringement of any of the foregoing.
"LEDUC PROPERTIES" means those properties described in Schedule 1.1(a) under the
heading Leduc Properties.
"LIEN" means any mortgage, lien, security interest, lease or other charge or
encumbrance, or any other type of preferential arrangement, and any easement,
right of way or other encumbrance on title to real property.
"LOSSES" means any and all liabilities, obligations, losses, damages, claims,
deficiencies, penalties, taxes, levies, actions, judgments, settlements, suits,
and all reasonable costs, legal fees, accountants' fees, disbursements or
expenses.
"MATERIAL CONTRACT" means, with respect to Wadeco and the Subsidiaries, each
agreement (including, without limitation, employment agreements, independent
contractor agreements, representative agreements, service agreements, sales
agreements, lease agreements, credit agreements, indentures, purchase
agreements, guarantees, non-competition agreements and consulting agreements),
contract or commitment, whether written or oral, of any nature or kind
whatsoever, in existence at the time of Closing:
(a) between Wadeco and/or the Subsidiaries and another Person involving
aggregate consideration payable to or by such Person of $50,000 or more
per year;
(b) between Wadeco and/or the Subsidiaries and any Affiliate, director,
shareholder or officer of Wadeco or the Subsidiaries including, without
limitation, all shareholder agreements;
(c) presently in effect providing or relating to Indebtedness in any
amount greater than $10,000 in respect of which Wadeco or the
Subsidiaries is in any manner directly or contingently obligated; or
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(d) not made in the ordinary course of business and which is otherwise
material to the business, condition (financial or otherwise), operations,
performance, properties or prospects of Wadeco or the Subsidiaries.
"NON-COMPETITION AGREEMENTS" mean, collectively, the Confidentiality and Non-
Competition Agreements between Wadeco and each of Hokanson, Bell and Rutherford
in the forms set forth in Exhibit 3 hereto.
"NON RECURRING TRANSACTIONS" means compensation paid to Hokanson, Bell and
certain members of Hokanson's family for the eight months ended December 31,
1995, and certain non-recurring charitable contributions for the eight months
ended December 31, 1995 including the income tax expense related to these
expenses.
"PERMITTED ENCUMBRANCES" means:
(a) Liens incurred or created in the ordinary course of business as
security in favour of any person who is conducting the development
or operation of the property to which such Liens relate for Wadeco's
or the Subsidiaries' share of the costs and expenses of such
development or operation which costs and expenses are not due or
delinquent;
(b) mechanics', builders' or materialmens' or other like Liens arising
by operation of law in the ordinary course of business in respect of
services rendered or goods supplied for which payment is not at the
time due;
(c) easements, rights of way, servitudes or other similar rights in
lands (including, without limitation, rights of way and servitudes
for railways, sewers, drains, gas and oil pipelines, gas and water
mains, electric light, power, telephone, telegraph or cable
television conduits, poles, wires and cables) which do not detract
from the value of the land concerned or impair its use;
(d) Liens imposed by statute securing the payment of taxes, assessments
or other governmental charges which are not due at the relevant
time; and
(e) those items listed in Schedule 4.16.
"PERSON" means an individual, partnership, corporation (including a business
trust), joint stock company, trust, unincorporated association, joint venture or
other entity, or a government or any political subdivision or agency thereof.
"PURCHASE PRICE" has the meaning ascribed thereto in Section 2.2.
"PURCHASED SHARES" means the 15,548 Common shares to be sold by the Vendor to
the Purchaser pursuant hereto, which shares constitute all of the issued and
outstanding securities of Wadeco.
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"REORGANIZATION" means the transactions whereby certain of the Former
Shareholders sell their interests in the Subsidiaries and the Subsidiaries
became subsidiaries of Wadeco, and such other transactions which were incidental
to such reorganization, which are more particularly described in Exhibit 4.
"REORGANIZATION DOCUMENTS" means the contracts, agreements, acknowledgments, or
other documents of any kind created or entered into in connection with or
incidental to the Reorganization.
"$" means Canadian Dollars. Unless otherwise specifically indicated, all
references to dollars herein shall refer to Canadian Dollars.
"SUBSIDIARIES" means Leo's Oilfield Hauling Ltd., Polysep Chemicals Inc. and
Wadeco Inc. and any predecessor companies thereof.
"SUBSIDIARY" has the meaning ascribed thereto in Section 2(4) of the Business
Corporations Act (Alberta).
"TAX" or "TAXES" means any and all taxes, fees, levies, duties, tariffs,
imposts, assessments, reassessments and other charges of any kind (together with
any and all interest, penalties, fines, loss, damage, liability, expense,
additions to tax and additional amounts or costs incurred or imposed with
respect thereto) imposed by any Governmental Authority or taxing authority,
including, without limitation:
(a) taxes or other charges on or with respect to income, franchises,
concessions, windfall or other profits, gross receipts, property,
sales, use, capital, gains, capital stock or shares, payroll,
employment, social security, workers' compensation, unemployment
compensation, or net worth;
(b) taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, goods and services or gains
taxes;
(c) license, registration and documentation fees; and
(d) customs duties, tariffs, and similar charges.
"TAX RETURN" means a report, return or other information required to be filed by
a Person with or submitted to a Governmental Authority or taxing authority with
respect to Taxes including, where permitted or required, combined or
consolidated returns for any group of entities that includes the Person.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement and the Non-
Competition Agreements and the other contracts, agreements, acknowledgments, or
other documents listed in the closing agenda prepared in connection with the
Closing.
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"WADECO" means Wadeco Oilfield Services Ltd. (including any and all of its
predecessor companies).
SECTION 2.
SALE AND PURCHASE OF PURCHASED SHARES
A. SALE AND PURCHASE OF PURCHASED SHARES
Subject to the terms and conditions set forth in this Agreement, the
Vendor agrees to sell to the Purchaser, and the Purchaser agrees to purchase
from the Vendor, the Purchased Shares as at and from the Effective Date.
B. PURCHASE PRICE OF PURCHASED SHARES
The price for the Purchased Shares shall be $1,445.688899 per share for
an aggregate purchase price of $22,477,571 (the "Purchase Price"), subject to
adjustment in accordance with Section 2.3 hereof. The Purchaser shall pay the
Purchase Price for the Purchased Shares at the Closing by wire transfer or such
other means that is acceptable to the Vendor and the Purchaser.
2.3 ADJUSTMENT TO PURCHASE PRICE
(a) The parties hereto agree that the Purchase Price shall be adjusted
based on the difference between the shareholders equity reflected in the
Closing Financial Statements and the shareholders equity reflected in the
December Financial Statements. Shareholders equity shall be determined
in a manner consistent with the historical accounting policies of Wadeco
and the Subsidiaries as applied to the December Financial Statement
except as noted in Schedule 4.7. The adjustment to the Purchase Price
shall equal the shareholders equity reflected in the Closing Financial
Statements minus the shareholders equity reflected in the December
Financial Statement. If such adjustment is positive, it shall increase
the Purchase Price by the amount of the adjustment, if such adjustment is
negative, it shall decrease the purchase price by the amount of the
adjustment.
(b) In the event of an increase in the Purchase Price, the Purchaser
shall thereafter pay to the Vendor the amount of the increase of the
Purchase Price. In the event of an decrease in the Purchase Price, the
Vendor shall thereafter pay to the Purchaser the amount of the decrease
of the Purchase Price.
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SECTION 3.
CLOSING
A. CLOSING
The closing (the "Closing") of the purchase and sale of the Purchased
Shares pursuant to this Agreement shall take place on May 31, 1996 or such other
date as is mutually acceptable to the Vendor and the Purchaser, at the offices
of Milner Fenerty, Edmonton, Alberta or at such other place and at such other
time as the Vendor and the Purchaser shall mutually agree in writing.
SECTION 4.
REPRESENTATIONS AND WARRANTIES OF THE VENDOR AND THE FORMER SHAREHOLDERS
The Vendor and each of the Former Shareholders jointly and severally
represent and warrant to the Purchaser as follows:
A. ORGANIZATION AND STANDING
The Vendor, Wadeco and the Subsidiaries are corporations duly organized
and validly existing under the laws of their respective jurisdictions of
formation. The Vendor, Wadeco and the Subsidiaries have full corporate power and
authority to own or lease their respective properties, including without
limitation, the Assets, and to conduct their business as presently conducted.
The Vendor, Wadeco and the Subsidiaries are duly authorized, qualified or
licensed to do business and validly exist as foreign or extra-provincial
corporations in each jurisdiction in which they are so required to be
authorized, qualified or licensed, which in the case of Wadeco are the provinces
of Newfoundland, British Columbia and Saskatchewan and in the case of the
Subsidiaries is the state of North Dakota with respect to Wadeco Inc.
B. AUTHORITY
The Vendor, Wadeco and each of the Subsidiaries has all requisite
corporate power and authority to execute, enter into and carry out the terms and
conditions of this Agreement, each of the other Transaction Documents, each of
the Reorganization Documents and each of the Excluded Transactions Documents to
be executed and delivered by the Vendor, Wadeco and the Subsidiaries, and all
other agreements and instruments contemplated hereby and thereby, and to perform
its obligations and consummate the transactions hereunder and thereunder. The
execution and delivery by the Vendor, Wadeco and the Subsidiaries of this
Agreement, each of the other Transaction Documents, each of the Reorganization
Documents, and each of the Excluded Transactions Documents, as applicable, the
performance by the Vendor, Wadeco and the Subsidiaries of its obligations
hereunder and thereunder and the consummation by the Vendor, Wadeco and the
Subsidiaries of the transactions contemplated hereby and thereby have been duly
authorized by the board of directors and the shareholders of the Vendor, Wadeco
and the Subsidiaries, and no other corporate act or proceeding on the part of
the Vendor, Wadeco or the Subsidiaries is necessary to approve the execution and
delivery of this Agreement, the other
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Transaction Documents, the Reorganization Documents, or the Excluded
Transactions Documents, the performance of the Vendors', Wadeco's and the
Subsidiaries' obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or thereby. This Agreement has been duly
executed and delivered by the Vendor, Wadeco and the Former Shareholders and is,
and the other Transaction Documents, the Reorganization Documents and the
Excluded Transactions Documents, as applicable, will be when executed and
delivered by the Vendor, Wadeco, the Subsidiaries and the Former Shareholders,
as applicable, legal, valid and binding agreements of it enforceable against the
Vendor, Wadeco, the Subsidiaries and the Former Shareholders in accordance with
their respective terms.
C. CAPITALIZATION
i. The authorized capital of Wadeco consists of 5,000,000 Common
shares, of which 15,548 Common shares are outstanding as fully paid
and nonassessable shares in the capital of Wadeco. The Purchased
Shares which represent all of the issued and outstanding securities
of Wadeco, are owned by the Vendor as beneficial and registered
owner, with good and marketable title thereto. The Purchased Shares
are duly authorized, validly issued, fully paid and nonassessable
and have not been issued in violation of the preemptive rights of
any Person and are free and clear of all Liens and restrictions.
Except as contemplated by this Agreement, Wadeco is not obligated to
issue or acquire any of its securities and there are no outstanding
rights, warrants, subscriptions, options or commitments to purchase
or otherwise acquire from Wadeco, respectively, any shares or other
securities of Wadeco or any securities or obligations convertible
into or exchangeable for any shares or other securities of Wadeco.
Except as contemplated by this Agreement, no Person has any
outstanding rights, warrants, subscriptions, options or commitments
(whether by law, pre-emptive or contractual) to purchase or
otherwise acquire from the Vendor any of the Purchased Shares or any
securities or obligations convertible into or exchangeable for any
Purchased Shares.
ii. The authorized capital of the Vendor consists of unlimited
number of Class A through Class Z shares and an unlimited number of
Class AA, Class BB and Class CC preferred shares. The registered and
beneficial owner of the only outstanding shares in the Vendor, which
are 100 Class C shares, 1,000 Class AA preferred shares, 305,584
Class BB preferred shares and 595,744 Class CC preferred shares, is
Hokanson. The Vendor is not obligated to issue or acquire any of its
securities and there are no outstanding rights, warrants,
subscriptions, options or commitments to purchase or otherwise
acquire from the Vendor any shares or other securities of the Vendor
or any securities or obligations convertible into or exchangeable
for any shares or other securities of the Vendor.
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D. SUBSIDIARIES
All of the shares of the Subsidiaries are, or will following the
Reorganization, be owned by Wadeco free and clear of all Liens and restrictions
and all of such shares are validly issued, fully paid and nonassessable. The
Subsidiaries are not obligated to issue or acquire any of its securities, and
there are no outstanding rights, warrants, subscriptions, options or commitments
to purchase or otherwise acquire any shares or other securities of the
Subsidiaries. Schedule 4.4 lists, prior to and after giving effect to the
Reorganization, each Subsidiary, the share ownership (including the capital
structure) of such Subsidiary, and the jurisdiction of incorporation. Other
than the Subsidiaries, Wadeco does not own any shares or other securities or
have any investment in any other body corporate or other Person.
E. NO VIOLATION
None of the execution, delivery or performance of this Agreement, any of
the other Transaction Documents, the Reorganization Documents or the Excluded
Transactions Documents, nor the consummation of the transactions contemplated
hereby or thereby (including, without limitation, as a result of a change of
control of Wadeco), will result in the creation of any Lien upon the Purchased
Shares or the assets or property of Wadeco or the Subsidiaries, or conflict
with, violate or result in any breach of any term or provision of, or constitute
a default under (whether with notice or lapse of time or both), or give any
third party the right to accelerate, cancel, terminate or modify any term,
condition or provision under, any charter provision, articles, bylaw, Material
Contract (including without limitation, any rights under any employment contract
as a result of a change of control of Wadeco) or Applicable Law to which Wadeco
or the Subsidiaries is a party or by which Wadeco or the Subsidiaries or any of
their assets are in any way bound or subject. None of the execution, delivery
or performance of this Agreement, any of the other Transaction Documents, the
Reorganization Documents or the Excluded Transactions Documents, nor the
consummation of the transactions contemplated hereby or thereby, will conflict
with, violate or result in any breach of any term or provision of, or constitute
a default under (whether with notice or lapse of time or both) or give any party
the right to accelerate, cancel, terminate or modify any term, condition or
provision under any charter provision, articles, bylaws or constating documents
of the Vendor or under any agreement to which the Vendor or any of the Former
Shareholders is a party, or any Applicable Law by which the Vendor, the Former
Shareholders or any of the of the Purchased Shares are in any way bound or
subject.
F. GOVERNMENTAL AND THIRD PARTY CONSENTS
Except as set forth in Schedule 4.6, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any Governmental Authority is required on the part of the Vendor,
Wadeco, any Subsidiaries, or the Former Shareholders in connection with the
transactions contemplated by this Agreement, the Transaction Documents, the
Reorganization Documents or the Excluded Transactions Documents. No consent,
approval, waiver or other action by any Person, whether under any Material
Contract of Wadeco or the Subsidiaries, or any agreement of the Vendor or the
Former Shareholders, or otherwise is required or necessary for the execution,
delivery and performance of this Agreement, the other
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Transaction Documents, the Reorganization Documents or the Excluded Transactions
Documents by the Vendor, Wadeco, or the Subsidiaries or the Former Shareholders
or the consummation of the transactions contemplated hereby or thereby.
G. FINANCIAL STATEMENTS
i. Wadeco has furnished to the Purchaser true, complete and accurate
copies of financial statements for Wadeco as of and for the periods
ended April 30, 1994, April 30, 1995, December 31, 1995 and, April
30, 1996, for Leo's Oilfield Hauling Ltd. as of and for the periods
ended September 30, 1994, April 30, 1995, December 31, 1995 and,
April 30, 1996, for Polysep Chemicals, Inc. as of and for the
periods ended December 31, 1995 and, April 30, 1996 for D&D
Enterprises as of and for the period ended December 31, 1994,
December 31, 1995 and May 30, 1996 and for Ashtin Developments as of
and for the period ended August 31, 1994, August 31, 1995, and May
30, 1996, all which are attached hereto in Schedule 4.7
(collectively, the "Wadeco Financial Statements").
ii. The financial and accounting books and records of Wadeco and the
Subsidiaries have been maintained in accordance with applicable
legal and accounting requirements and good business practices, are
complete and correct and accurately reflect the basis for the Wadeco
Financial Statements.
iii. Other than as set forth in Schedule 4.7, the Wadeco Financial
Statements were prepared in accordance with the books and records of
Wadeco and the Subsidiaries and present fairly, in all material
respects, the financial position of Wadeco and the Subsidiaries and
the results of their operations and the changes in their financial
position in accordance with GAAP.
iv. Except as reflected in the Closing Financial Statements or in the
Reorganization Documents, neither Wadeco nor the Subsidiaries has
any Indebtedness, guarantee, liability, claim or obligation of any
nature, whether accrued, absolute, contingent or otherwise, whether
due or to become due, and there is no basis for the assertion
against Wadeco or the Subsidiaries of any such Indebtedness,
guarantee, liability, claim or obligation, except normal and usual
current liabilities incurred, and normal and usual obligations under
agreements entered into in the ordinary course of business since
April 30, 1996. Except as set forth in Schedule 4.7 as of the
Closing, neither Wadeco nor any Subsidiary has any Indebtedness to
or from any of the Former Shareholders.
v. All accounts receivable ("Accounts Receivables") of Wadeco and the
Subsidiaries are bona fide, have been generated in the ordinary
course of business, consistent with past practices, are valid and
binding obligations of the account debtors, and, subject to the
allowance for doubtful accounts made in accordance with GAAP
(consistently applied), are fully collectible within one
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hundred and eighty (180) days at the aggregate recorded amounts
thereof (subject to no defense, counterclaim or set-off).
vi. Except as set forth in Schedule 4.7, there are no liabilities
either accrued, absolute or contingent, including, without
limitation, liabilities under any applicable environmental, safety
or health law or regulation or common law theory of liability of
wadeco or the subsidiaries of any kind whatsoever, in respect of
which the purchaser may become liable on or after the consummation
of the transactions contemplated by this agreement, the other
transaction documents or the reorganization documents.
vii. Except as set forth in Schedule 4.7, each of the December Financial
Statements and the Closing Financial Statements were prepared in
accordance with the Wadeco Financial Statements for the respective
periods, on a consistent basis, and present fairly, in all material
respects, the financial position of Wadeco and the Subsidiaries and
the results of their operations in accordance with GAAP.
H. TAXES
i. Except as set forth in Schedule 4.8, Wadeco and the Subsidiaries
have, at the prescribed times, filed all Tax Returns that are
required to be filed by them with any Governmental Authority, made
and remitted all required deductions or withholdings at source, and
have paid all Taxes due pursuant to the Tax Returns or any
assessments received by them or otherwise required to be paid,
except Taxes being contested in good faith by appropriate
proceedings and for which adequate reserves or other provisions are
maintained. All Tax Returns are true, complete and correct in all
material respects, and properly reflect, and do not in any respect
understate, the taxable income or the liability for Taxes of Wadeco
and/or the Subsidiaries, as the case may be, in the relevant tax
year or calendar year. Adequate provision has been made in the
Wadeco Financial Statements for the year ended April 30, 1996 for
all Taxes payable in respect of the business or assets of Wadeco
and the Subsidiaries. Except as set forth in Schedule 4.8, no
adjustment relating to such Tax Returns has been proposed formally
or informally by any Governmental Authority and, no basis exists
for any such adjustments involving a material amount of Taxes.
ii. Except as set forth in Schedule 4.8, Tax Returns of Wadeco and the
Subsidiaries filed pursuant to the Income Tax Act (Canada) and any
other applicable laws of Canada or the United States or any other
applicable jurisdiction imposing taxes have been audited through
the years ended as set forth in Schedule 4.8 and assessed through
the years ended as set forth in Schedule 4.8, and such assessments,
if any amounts were owing in respect thereof, have been provided
for in the Closing Financial Statement. There is no basis for any
adverse reassessment by any Governmental Authority for any year
remaining open for reassessment. Neither Wadeco nor the
Subsidiaries is a party to any claim, action, suit, inquiry,
proceeding, investigation or audit by
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any Governmental Authority and no claim has been asserted,
threatened or proposed against either Wadeco or the Subsidiaries
for assessment or collection of any Taxes other than those that
have been properly reserved for in the Closing Financial
Statements. The Company and the Subsidiaries have not executed or
filed with Revenue Canada or any other Governmental Authority any
agreement extending the period of assessment or collection of any
Taxes.
iii. Without limiting the generality of the foregoing, Wadeco and the
Subsidiaries are in absolute compliance, in all material respects,
with all registration, timely reporting and remittance obligations
in respect of all taxation legislation applicable to Wadeco and the
Subsidiaries. All Taxes that Wadeco or the Subsidiaries are
required to withhold or collect have been withheld or collected
and, to the extent required, have been paid over to the proper
Governmental Authority at the prescribed times.
iv. No portion of the real property or plant, structures, fixtures or
improvements of Wadeco or the Subsidiaries is subject to any
special assessment. There is no reason to know of any proposal for
any such assessment.
I. ABSENCE OF CHANGE
Except as reflected in the Excluded Transactions and the Reorganization
Documents, since December 31, 1995, Wadeco and the Subsidiaries have conducted
their businesses only in the ordinary course, consistent with past practices,
and there has not been:
i. any material change in the financial condition, results of
operations, business, prospects, assets, personnel, affairs or
liabilities (contingent or otherwise) of Wadeco or the Subsidiaries
or with respect to the manner in which they conduct their business
or operations;
ii. any amendment or change or the taking of any action to amend or
change the articles or the by-laws of Wadeco or the Subsidiaries;
iii. any increase in salary, wages, bonus, commission or other
compensation payable to any officers, employees or agents of Wadeco
or the Subsidiaries, other than increases in the ordinary course of
business and consistent with past practices;
iv. other than as set forth in Schedule 4.9, any loan to or
transaction with any of Wadeco's or the Subsidiaries's directors,
officers, shareholders or employees giving rise to any claim or
right of, by or against any person in an amount or having a value
in excess of $5,000 individually or in the aggregate;
v. except as set forth in Schedule 4.9, any default (including,
without limitation, any event that with the giving of notice or
passage of time would constitute a default), modification,
acceleration, termination or threatened termination
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under or amendment to any existing Material Contract of Wadeco or
the Subsidiaries;
vi. except as set forth in Schedule 4.9, subjection of any of the
Assets to mortgage, pledge or Lien, other than Permitted
Encumbrances;
vii. any material theft, damage, destruction, casualty, loss,
condemnation or expropriation by a Governmental Authority
affecting the Assets, Wadeco or the Subsidiaries, whether or not
covered by insurance;
viii. any sale, assignment or transfer of any Assets of Wadeco or the
Subsidiaries, except in the ordinary course of business and
consistent with past practices;
ix. except as set forth in Schedule 4.9, any waiver, release,
cancellation, settlement or compromise of any debt (including
forgiveness of any inter-company loans or obligations), claim or
right of Wadeco or the Subsidiaries;
x. any discharge or satisfaction of any Lien or payment of any
Indebtedness or other obligations of Wadeco or the Subsidiaries
other than Indebtedness or obligations incurred in the ordinary
and normal course of business, consistent with past practices;
xi. any transfer of any right under any lease, license or agreement
or to any Intellectual Property or other intangible asset of
Wadeco or the Subsidiaries;
xii. any transactions, Material Contracts, commitments or obligations
entered into affecting Wadeco, the Subsidiaries or the Assets
except in the ordinary course of business and consistent with past
practices;
xiii. any issuance, sale or grant of shares, options, warrants, bonds,
debentures or other securities or rights to acquire securities of
Wadeco or the Subsidiaries;
xiv. any dividend declared or paid or distribution made with respect
to any securities of Wadeco or the Subsidiaries;
xv. any change in the accounting principles, methods, estimates or
practices followed by Wadeco or the Subsidiaries;
xvi. any claim or anticipated claim relating to any products or
services sold or provided by Wadeco or the Subsidiaries or the
occurrence of any event or emergence of any circumstances which
might reasonably be expected to result in any such claim;
xvii. other than Hokanson or Bell, received notice from any employee,
or aware of any employee, that does not intend to continue to be
employed by Wadeco or a
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Subsidiary as a result of the transactions described herein, as
the case may be; or
xviii. any agreement or understanding to do any of the foregoing.
J. LITIGATION; INVESTIGATIONS
Other than as set forth in Schedule 4.10, there are currently no pending
or threatened, lawsuits, administrative proceedings or reviews or investigations
(including any proceeding, review or investigation before or by any Person or
Governmental Authority) against or relating to the Assets, Wadeco or the
Subsidiaries or by Wadeco or the Subsidiaries. Neither Wadeco nor the
Subsidiaries is subject to any currently existing order, writ, injunction or
decree specifically relating to Wadeco or the Subsidiaries.
K. PRODUCT AND/OR SERVICE LIABILITY
Without limiting the generality of Section 4.10 and other than as set
forth in Schedule 4.10, there are no pending or threatened or prospective
claims, actions, suits, inquiries, proceedings or investigations (including any
proceedings, reviews or investigations before or by any Person or Governmental
Authority) against Wadeco or the Subsidiaries with respect to or involving
Wadeco's or the Subsidiaries's business relating to any products sold or
services provided in the course of such business on or before the day of
Closing, or alleging that, for any reason:
i. any products or services of Wadeco or the Subsidiaries were
defective;
ii. any products of Wadeco or the Subsidiaries were improperly
designed, manufactured or labeled;
iii. any services provided by Wadeco or the Subsidiaries were
improperly performed;
iv. any services provided by Wadeco or the Subsidiaries were
conducted in a manner resulting in harm, or the possibility of
harm, to public health or safety; or
v. any products or services of Wadeco or the Subsidiaries were
prepared or provided in a manner resulting in harm, or the
possibility of harm, to the environment (including, without
limiting the foregoing, the sites or locations where Wadeco or the
Subsidiaries may conduct their businesses from time to time).
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L. COMPLIANCE
Except as set forth in Schedule 4.12, neither Wadeco nor the
Subsidiaries, nor the use, operation or maintenance of any of the Assets or the
conduct of the business of Wadeco or of the Subsidiaries, is in contravention
of, or constitutes a default under or a violation of, any applicable statute,
law, ordinance, decree, order, rule or regulation of any Governmental Authority
(including, without limitation, those relating to Tax, health, safety, labour or
employment), except for Environmental Laws, which are the subject of the
separate representations and warranties contained in Section 4.13 below. No
notice of any such default, violation or contravention has been received by the
Vendor, Wadeco or the Subsidiaries from any Governmental Authority. Wadeco and
the Subsidiaries have all permits, licenses, certificates and other governmental
authorizations necessary to conduct their businesses as presently conducted
(including without limitation those required to permit Leo's Oilfield Hauling
Ltd. to engage in inter-provincial transportation as currently provided by Leo's
Oilfield Hauling Ltd. in B.C., Saskatchewan and Alberta), and are in compliance
with all such authorizations.
M. ENVIRONMENTAL MATTERS
i. Wadeco and the Subsidiaries have obtained all permits, licenses
and other authorizations required under all Environmental Laws to
carry on their businesses as now being conducted. Each of such
permits, licenses and authorizations is in full force and effect
and Wadeco and the Subsidiaries are in compliance with the terms
and conditions thereof. None of the permits, licenses or other
authorizations will become void or voidable as a result of Wadeco
and the other parties hereto entering into this Agreement or as a
result of the Closing or as a result of the Reorganization, nor is
any consent to such transactions required to maintain the permits,
licenses or other authorizations in full force and effect. Wadeco
and the Subsidiaries have conducted all their businesses and
operations in full compliance with Environmental Laws and have not
given rise to any Environmental Deficiency.
ii. Except as set forth in Schedule 4.13:
(1) no written notice, notification, demand, request for
information, citation, summons or order has been issued, no
complaint has been filed, no conviction has occurred, no penalty
has been assessed and no investigation or review is pending or
threatened by any Governmental Body or other entity with respect
to any alleged failure by Wadeco or the Subsidiaries to comply
with Environmental Laws in respect of an Environmental Deficiency;
(2) no urea formaldehyde foam insulation or polychlorinated
biphenyls (PCB's) are or have been present at any site or facility
now or previously owned, operated or leased by Wadeco or the
Subsidiaries in excess of concentrations allowed by Environmental
Laws;
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(3) no friable asbestos or asbestos-containing materials are
present at any site or facility now or previously owned, operated
or leased by Wadeco or the Subsidiaries in excess of
concentrations allowed by the Environmental Laws;
(4) there are no underground storage tanks or surface
impoundments for Hazardous Materials, active or abandoned, at any
site or facility now or previously owned, operated or leased by
Wadeco or the Subsidiaries except such as are or were (at the time
owned, operated or leased by Wadeco or the Subsidiaries) in
compliance with Environmental Laws;
(5) there has not been any release of Hazardous Materials at,
on or under any site or facility now or previously owned, operated
or leased by Wadeco or the Subsidiaries in violation of any
Environmental Laws or where the release would create an
Environmental Deficiency;
(6) there has not been any release, recycling, treatment,
storage or disposal of Hazardous Materials generated by Wadeco or
the Subsidiaries in violation of Environmental Laws at any
location or where such release, recycling, treatment, storage or
disposal would create an Environmental Deficiency;
(7) no Liens have arisen under or pursuant to any Environmental
Laws on any site or facility owned, operated or leased by Wadeco
or the Subsidiaries, and no government action has been taken or is
in process that could subject any such site or facility to such
Liens and Wadeco and the Subsidiaries are not required to place
any notice or restriction relating to the presence of Hazardous
Materials or any Environmental Deficiency at any site or facility
owned by it in any deed to the real property on which such site or
facility is located;
(8) there have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or that are
in the possession of the Vendor, Wadeco or the Subsidiaries in
relation to any site or facility now or previously owned, operated
or leased by Wadeco or the Subsidiaries which have not been made
available to the Purchaser;
(9) any Hazardous Material handled or dealt with in any way in
connection with the business, properties or operations of Wadeco
or the Subsidiaries, whether before or during the period the same
have been under the control of Wadeco and the Subsidiaries has
been and is being handled or dealt with in all respects in
substantial compliance with Environmental Laws and otherwise in a
manner that could not create an Environmental Deficiency;
(10) no sewage, waste or by-product is being or has been
discharged, spilled on or stored, processed or treated at, any
real property or other facilities now or previously owned, leased,
licensed or used by Wadeco or the Subsidiaries, including, but not
limited to, its real property and leaseholds, which discharge,
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spill, storage, processing or treatment could create an
Environmental Deficiency; and
(11) during the five years ending on the date of this Agreement,
no employee or other person has made a written claim or demand or
an oral claim or demand against Wadeco or the Subsidiaries based
on alleged damage to health caused by any Hazardous Material or by
any sewage, waste or by-product.
N. MATERIAL CONTRACTS
Other than as set forth in Schedule 4.14, all Material Contracts to which
Wadeco or the Subsidiaries is a party or by which any of the Assets is in any
way bound or obligated are valid, binding and in full force and effect and
enforceable in accordance with their respective terms and conditions and Wadeco
and the Subsidiaries are entitled to all rights and benefits thereunder, and
there is no existing default thereunder or breach thereof or condition which,
with the passage of time or notice or both, might constitute such a default by
any party thereto, and there has been no termination or threatened termination
or notice of default under any such Material Contract. Schedule 4.14 sets forth
a complete list of all existing Material Contracts of Wadeco and the
Subsidiaries.
O. SUPPLIERS AND CUSTOMERS
Schedule 4.15 contains a complete and accurate list of the largest 50
customers and largest 10 suppliers of Wadeco and the approximate dollar amount
of the businesses of Wadeco which each customer and supplier represented during
the year ended April 30, 1996. Except as set forth in Schedule 4.15, Wadeco and
the Subsidiaries have received no notice that any such supplier or customer of
Wadeco or the Subsidiaries does not plan to continue to do business with Wadeco
or the Subsidiaries, or plans to reduce its supplies to or volume of orders from
Wadeco or the Subsidiaries or will not do business on substantially the same
terms and conditions with Wadeco or the Subsidiaries subsequent to Closing as
such supplier or customer did with Wadeco or the Subsidiaries prior to such
time.
P. ASSETS
i. Wadeco and the Subsidiaries have good and marketable title to each
of their respective Assets (together with all additions thereto
and less all dispositions thereof in the ordinary course of their
businesses) free and clear of all Liens, except for Permitted
Encumbrances. All equipment leases of Wadeco and the Subsidiaries,
are valid, binding and in full force and effect and enforceable in
accordance with their respective terms and conditions, and there
is no existing default thereunder or breach thereof or condition
which, with the passage of time or notice or both, might
constitute such a default by any party thereto, and there has been
no termination or threatened termination or notice of default
under any such lease. Schedule 1.1(a) sets forth a complete list
of the Equipment of Wadeco and the Subsidiaries. Furthermore, the
only Equipment
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that are serial number goods (as defined in the Personal Property
Security Regulation (Alberta)) are those Assets listed under the
heading "Vehicles", "Trucks" and "Trailers" in Schedule 1.1(a).
ii. Other than as set forth in Schedule 4.16, Wadeco and the
subsidiaries have maintained, serviced and repaired the equipment
so as to keep such equipment in good operating condition in
accordance with standard industry practices and within the
acceptable limits of performance provided in the applicable
manufacturer's, owners' or maintenance manuals or other similar
documents.
Q. INTELLECTUAL PROPERTY
Schedule 4.17 contains an accurate and complete list of all Intellectual
Property. In regard to such Intellectual Property, and except as set forth in
Schedule 4.17, the patents, trademarks and copyrights are valid, subsisting and
enforceable, and the patents, registered trademarks and registered copyrights
are duly recorded in the name of Wadeco and/or the Subsidiaries, as the case may
be, and can be recorded in the name or names of Wadeco and/or the Subsidiaries.
Except as set forth in Schedule 4.17, Wadeco and the Subsidiaries have, and
after the Closing will have, except as set forth in this Agreement, the sole and
exclusive ownership and right, free from any Liens, mortgages, security
interests, charges or encumbrances, to use the Intellectual Property and the
consummation of the transactions contemplated hereby will not alter or impair
any such rights. Except as set forth in Schedule 4.17, within the last ten
years, no claims have been asserted by any entity or person with respect to, or
challenging or questioning, the ownership, validity, enforceability or use of
the Intellectual Property nor is there a valid basis for any such claim. The
use or other exploitation of the Intellectual Property by Wadeco or the
Subsidiaries, as the case may be, does not infringe the rights of any other
entity or person. No entity or person is infringing the rights of Wadeco or the
Subsidiaries with respect to the Intellectual Property. Schedule 4.17 sets
forth a true and complete list of all license agreements between Wadeco and/or
the Subsidiaries, as the case may be, and third parties with respect to the use
of the Intellectual Property. The Intellectual Property is used exclusively in
connection with the businesses of Wadeco and the Subsidiaries and is not used in
a manner likely to cause confusion in the marketplace. All trade secrets of
Wadeco and the Subsidiaries are the unencumbered property of Wadeco and/or the
Subsidiaries, do not infringe upon the rights of any third party, were developed
by Wadeco and/or the Subsidiaries and their respective employees with
appropriate secrecy safeguards, are not generally known by others and have been
maintained by Wadeco and the Subsidiaries subject to secrecy safeguards. There
are no persons or entities (other than the authorized agents of Wadeco and the
Subsidiaries) who have written copies of the formulae or any other written,
recorded or registered information relating to such trade secrets. No third
party which is not duly authorized by Wadeco or the Subsidiaries, as the case
may be, is or has engaged in any activity which would constitute a
misappropriation or dissemination of any of the trade secrets of Wadeco or the
Subsidiaries or any other Intellectual Property.
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R. CORPORATE DOCUMENTS
i. True, correct and complete copies of the charter documents and
bylaws of Wadeco and the Subsidiaries have been delivered or made
available to the Purchaser. The corporate minute books of the
Vendor, Wadeco and the Subsidiaries are complete in all material
respects and contain the minutes of all the meetings of and other
actions (including consent resolutions) taken by their respective
directors and shareholders, all such meetings were duly called and
properly held and all consent resolutions properly adopted, and
true and complete copies of such minutes and consent resolutions
have been made available to the Purchaser.
ii. Other than as set forth in Schedule 4.18, neither Wadeco nor the
Subsidiaries is a party to any agreement, contract or arrangement
which obligates Wadeco or the Subsidiaries to indemnify or hold
harmless the Vendor, or any of the Former Shareholders, any of the
directors or officers of Wadeco or the Subsidiaries or any other
Person.
S. EMPLOYEES
i. Schedule 4.19 sets forth a complete and correct list of:
(1) all permanent full time employees of Wadeco and the
Subsidiaries and all consultants retained by Wadeco and the
Subsidiaries including in each case the terms of their employment
or retainer and details of all written or oral agreements with
such employees or consultants. No employees of Wadeco or the
Subsidiaries are subject to any union or collective bargaining
agreements; and
(2) all Employee Plans of Wadeco and the Subsidiaries. Wadeco and
the Subsidiaries have made available to the Purchaser true and
complete copies of its Employee Plans and all related summary
descriptions, including, without limitation, copies of any
employee handbooks listing or describing any of their Employee
Plans and summary descriptions of any of their Employee Plans not
otherwise in writing.
ii. All Employee Plans listed in Schedule 4.19 have been duly
registered where required by, and are, in all respects, in good
standing under, all applicable legislation including, without
limiting the generality of the foregoing, the Income Tax Act
(Canada) and the Pension Benefits Standards Act, 1985 (Canada) and
applicable U.S. legislation and, except as disclosed in Schedule
4.19, all required employer contributions under such plans have
been made and the applicable funds have been funded in accordance
with the terms thereof, no notices of under funding have been
received and no past service funding liabilities exist thereunder,
and there are currently no pending, and neither Wadeco nor the
Subsidiaries is aware of any threatened, lawsuits, claims,
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<PAGE>
administrative proceedings or reviews or investigations relating
to or involving any such plans.
iii. Except as previously disclosed to the Purchaser in writing, which
writing makes reference to this Agreement, Wadeco and the
Subsidiaries have fulfilled or have taken all actions necessary to
enable them to fulfil when due all of their obligations under each
of their Employee Plans and there is no existing default or event
of default or any event which, with or without the giving of
notice or the passage of time, would constitute a default by
either of them under any Employee Plan of Wadeco or the
Subsidiaries.
iv. Except as set forth in Schedule 4.19, Wadeco and the Subsidiaries
have complied with all of their obligations related to, and are
not in default under, any material written or oral employment
agreements and any written personnel policies to which Wadeco
and\or the Subsidiaries is a party or by which Wadeco or the
Subsidiaries are bound.
v. Wadeco and the Subsidiaries are in compliance in all material
respects with all applicable statutes and regulations in Canada,
the United States and all applicable foreign jurisdictions
respecting employment and employment practices, terms and
conditions of employment and wages and hours, occupational health
and safety laws and there are no outstanding or threatened claims
by or on behalf of any employees or former employees relating to
their employment or length of employment. Neither Wadeco nor the
Subsidiaries is engaged in any unfair labour practice.
vi. There is no unfair labor practice or other complaint against
Wadeco or the Subsidiaries pending before any Governmental
Authority or board or agency.
vii. There is no labor strike, dispute, slowdown or stoppage pending or
threatened against or affecting Wadeco or the Subsidiaries or any
of their Assets.
viii. No representation question exists respecting the employees of
Wadeco or the Subsidiaries.
ix. Other than as set forth in Schedule 4.19, there are no grievances
filed against Wadeco or the Subsidiaries.
x. There are no collective bargaining agreement between Wadeco or the
Subsidiaries and any of their respective employees.
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<PAGE>
T. INSURANCE
i. Schedule 4.20 contains a true and complete list and summary
description of all insurance policies and bonds insuring Wadeco's
and the Subsidiaries's assets or businesses and all such policies
and bonds are in full force and effect, with all premiums due
thereon paid, and such policies and bonds (or equivalent
substitutions or replacements) will remain in full force and
effect at the time of the Closing.
ii. The insurance policies and bonds of Wadeco and the Subsidiaries
are maintained with responsible insurers and provide coverage in
such amounts and against such risks as are reasonable and prudent
in light of the nature of the business and Assets of Wadeco and
the Subsidiaries.
iii. Wadeco and the Subsidiaries have complied in all respects with the
provisions of such policies and bonds.
iv. There exist no pending claims against such insurance policies or
bonds as to which the insurers have denied liability, and there
exist no claims under such insurance policies or bonds that have
not been properly filed.
v. Except as set forth in Schedule 4.20, no insurance has been
refused with respect to Wadeco's or the Subsidiaries's assets or
businesses nor has the coverage of any insurance been limited or
canceled by any insurance carrier which has carried, or received
an application for, any such insurance.
U. REAL PROPERTY
i. Neither Wadeco nor the Subsidiaries hold, or have held, a fee
simple absolute title to any real property other than the Leduc
Properties.
ii. All buildings, structures and improvements on the Leduc
Properties have been constructed in conformity with all applicable
building, or safety codes or other Applicable Laws. There are no
pending or threatened condemnation or eminent domain proceedings
that may affect the Leduc Properties. Except as set forth in
Schedule 4.21, the use, occupancy and operation of the Leduc
Properties by Wadeco and/or the Subsidiaries complies with all
applicable regulations, codes, ordinances, statutes and other
Applicable Laws, including without limitation, those relating to
health and sanitation, environmental protection, occupational
safety and the use of electrical power. None of the buildings and
improvements on the Leduc Properties encroaches upon any other
lands and there are no restrictive covenants, statutes, by-laws,
ordinances, regulations, covenants, restrictions or official plans
which in any way restrict or prohibit the use of the said
buildings, improvements or real property for the purposes for
which they are presently being used. All utilities that are
required for the full and complete occupancy and use of the Leduc
Properties
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for the purposes for which such real estate is presently being
used, including without limitation electricity, water, telephone
and similar systems, have been connected to the Leduc Properties
and are in good working order. There are no pending or threatened
claim of any nature relating to any real property formerly owned
or occupied by Wadeco or the Subsidiaries which could subject
Wadeco or the Subsidiaries to any material liability. There are no
local improvement levies in respect of the Leduc Properties.
iii. Schedule 4.21 hereto sets forth a complete list of all real
property leases (the "Real Property Leases") of Wadeco and the
Subsidiaries.
iv. Except as disclosed in Schedule 4.21, all interests held by
Wadeco or the Subsidiaries as lessee under the Real Property
Leases are free and clear of all Liens or restrictions of any
nature and kind whatsoever.
v. All payments required to be made by Wadeco or the Subsidiaries
pursuant to the Real Property Leases have been duly paid and
Wadeco and the Subsidiaries are not otherwise in default in
meeting their obligations under any of the Real Property Leases.
vi. None of the landlords under any of the Real Property Leases is
in default in meeting any of its obligations under its respective
Real Property Lease.
vii. Neither Wadeco nor the Subsidiaries has any option, right of first
refusal or other contractual right relating to the leased premises
covered by any Real Property Lease. No event exists which, but for
the lapse of time or the giving of notice, or both, would
constitute default under any such option, right of first refusal
or other contractual right and no party to any such right is
claiming any such default or taking any action purportedly based
upon the default.
viii. No event exists which, but for the passing of time or the giving
of notice, or both, would constitute a default by either party to
any of the Real Property Leases and no party to any Real Property
Lease is claiming any such default or taking any action
purportedly based upon any such default.
ix. Wadeco and the Subsidiaries have not waived, or omitted to take
any action in respect of any substantial rights under any Real
Property Lease.
x. With respect to the leases affecting Wadeco or the Subsidiaries as
lessors, save for the current month's rent, no rent has been
prepaid or last month's rental given to Wadeco or the
Subsidiaries, as the case may be, by any tenant which is not
disclosed in the leases and no lessee is now or will hereafter be
entitled to any concession, rebate, allowance or free rent with
respect to the occupancy of its premises.
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<PAGE>
xi. Each lessee is at arm's length from Wadeco and the Subsidiaries,
is in possession of and paying full rent as required pursuant to
its lease, no notice has been received from any lessee indicating
any intention to assign or sublet or indicating any intention to
surrender the term or otherwise part with possession of the
premises demised to it except as disclosed in Schedule 4.21
hereto, and such leases are in full force and effect without
amendment thereto and neither Wadeco nor the Subsidiaries is
otherwise in default in meeting its obligations contained in any
such lease.
xii. Neither Wadeco nor the Subsidiaries is now or shall be at Closing
obligated to alter, improve or otherwise expend money on premises
demised to the lessees of the real property referred to in
Schedule 4.21 hereto.
V. NO OTHER AGREEMENTS
Neither the Vendor, the Former Shareholders, Wadeco nor the Subsidiaries,
or any of their respective Affiliates has entered into any agreement, commitment
or understanding with any other Person with respect to the acquisition by such
Person, directly or indirectly, of all or any portion of the business,
properties, assets or shares of Wadeco or the Subsidiaries, whether by merger,
purchase of assets or stock, tender offer, joint venture or similar transaction.
W. RECORDS
All records relating to Wadeco's and the Subsidiaries' assets are
maintained in all respects in accordance with applicable legal, regulatory and
other requirements in Canada and any other Governmental Authority having
jurisdiction so as to reflect accurately Wadeco's and the Subsidiaries's
compliance with all statutory, legal, administrative, manufacturer, insurance,
lessor and industry requirements. True, correct and complete copies of all
documents referred to in the Schedules hereto have been delivered or otherwise
made available to the Purchaser.
X. BANK ACCOUNTS
Schedule 4.24 hereto sets forth a true and complete list showing:
(a) The name of each bank, trust company or similar institution in which
Wadeco or any of the Subsidiaries has accounts or safety deposit boxes
and the names of all persons authorized to draw thereon or to have access
thereto; and
(b) The name of each person, firm or corporation or business organization
holding a general or special power of attorney from Wadeco or any of the
Subsidiaries, together with a summary of the terms thereof.
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<PAGE>
Y. REORGANIZATION AND EXCLUDED TRANSACTIONS
The entering into and consummation of the Reorganization and the Excluded
Transactions will not result in the creation of any Lien upon Wadeco or the
Subsidiaries or the Shares to be owned by the Purchaser following the
Reorganization or the Excluded Transactions or upon the Assets or conflict with,
violate or result in any breach of any term or provision of, or constitute a
default under (whether with notice or lapse of time or both), or give any third
party the right to accelerate, cancel, terminate or modify any term, condition
or provision under, any charter provision, by-law, Material Contract of Wadeco
or the Subsidiaries or Applicable Law to which Wadeco or the Subsidiaries is a
party or by which Wadeco or the Subsidiaries or any of the Assets are in any way
bound or subject or create any liability whatsoever (including without
limitation, any liability for Taxes), for Wadeco, the Subsidiaries or the
Purchaser. Furthermore, the Reorganization has been, or will be as part of
Closing, completed in accordance with its terms and the capitalization and
ownership will be as set forth in Section 4.3 and 4.4 hereof, which Sections are
incorporated in this Section 4.25 by this reference.
Z. BROKERS OR FINDERS FEES
No person has been authorized to act as financial adviser, broker,
finder, investment banker or other intermediary that might be entitled to any
commissions or other compensation in the nature of finders' or brokers' fees
from Wadeco or the Subsidiaries upon the conclusion of or in connection with any
of the transactions contemplated herein.
AA. RESIDENCY
The Vender is not a non-resident of Canada within the meaning of the
Income Tax Act (Canada).
SECTION 5.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Former Shareholders and the
Vendor as follows:
A. ORGANIZATION
The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the Province of Alberta. The Purchaser has full
corporate power and authority to own or lease its properties and to conduct its
business as presently conducted.
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B. AUTHORITY
The Purchaser has all requisite corporate power and authority to execute,
enter into and carry out the terms and conditions of this Agreement, each of the
other Transaction Documents to be executed and delivered by the Purchaser, and
all other agreements and instruments contemplated hereby and thereby, and to
perform its obligations and consummate the transactions hereunder and
thereunder. The execution and delivery by the Purchaser of this Agreement and
each of the other Transaction Documents, the performance by the Purchaser of its
obligations hereunder and thereunder and the consummation by the Purchaser of
the transactions contemplated hereby and thereby have been duly authorized by
the Purchaser, and no other act or proceeding on the part of the Purchaser is
necessary to approve the execution and delivery of this Agreement or the other
Transaction Documents, the performance of the Purchaser's obligations hereunder
or thereunder or the consummation of the transactions contemplated hereby or
thereby. This Agreement has been duly executed and delivered by the Purchaser
and is, and the other Transaction Documents will be when executed and delivered
by the Purchaser, legal, valid and binding agreements of it enforceable against
the Purchaser in accordance with their respective terms.
C. NO VIOLATION
None of the execution, delivery or performance of this Agreement or any
of the other Transaction Documents, nor the consummation of the transactions
contemplated hereby or thereby, will result in the creation of any Lien upon the
interest of the Purchaser or the assets or property of the Purchaser or conflict
with, violate or result in any breach of any term or provision of, or constitute
a default under (whether with notice or lapse of time or both), or give any
third party the right to accelerate, cancel or terminate any term, condition or
provision under, any charter provision, bylaw, material contract or Applicable
Law to which is a party or by which the Purchaser or any of its assets are in
any way bound or subject.
D. GOVERNMENTAL AND THIRD PARTY CONSENTS
Except as set forth in Schedule 5.4 hereto, no consent, approval, order
or authorization of, or registration, qualification, designation, declaration or
filing with any Governmental Authority is required on the part of the Purchaser
in connection with the transactions contemplated by this Agreement. No consent,
approval, waiver or other action by any Person is required or necessary for the
execution, delivery and performance of this Agreement or the other Transaction
Documents by the Purchaser, or the consummation of the transactions contemplated
hereby or thereby.
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<PAGE>
SECTION 6.
INTENTIONALLY DELETED
SECTION 7.
INTENTIONALLY DELETED
SECTION 8.
INTENTIONALLY DELETED
SECTION 9.
INTENTIONALLY DELETED
SECTION 10.
INDEMNIFICATION
A. INDEMNIFICATION OF PURCHASER
The Vendor and the Former Shareholders, shall jointly and severally
indemnify and hold harmless the Purchaser and its Affiliates from and against
any and all Losses incurred by, borne by or asserted against any of such
indemnified parties (which include, for greater certainty, any Losses incurred
by, borne by or asserted against Wadeco or the Subsidiaries) in any way relating
to, arising out of or resulting from:
i. the breach of any of the representations or warranties made by the
Vendor or the Former Shareholders in this Agreement or in any
Schedule delivered pursuant to this Agreement, other than the
representations and warranties contained in Sections 4.8, 4.10,
4.11, 4.13 and 4.25, which are included in the separate
indemnities set forth below;
ii. any breach or inaccuracy of any of the representations and
warranties made in Section 4.8 of this Agreement or any liability
of Wadeco or the Subsidiaries for Taxes relating to the period
ending on or prior to April 30, 1996 (to the extent such Taxes are
not provided or reserved for on the financial statements referred
to in Section 4.7), whether known or unknown at the date of this
Agreement or for Taxes in any way relating to, or arising as a
result of, the Reorganization or the Excluded Transactions;
iii. (i) any breach or inaccuracy of any of the representations and
warranties made in Sections 4.11 or 4.10 of this Agreement or any
liability of Wadeco or the Subsidiaries relating to, or arising as
a result of any claim or action relating to or arising out of the
conduct of the business of Wadeco or the Subsidiaries prior to the
Closing including without
37
<PAGE>
limitation any claim or action relating to the failure to properly
maintain the Equipment or relating to product or service liability
performed by, for or behalf of Wadeco or the Subsidiaries, other
than those claims set forth in paragraph (c)(ii) and paragraph
(c)(iii), which are the subject of separate indemnities;
(ii) any and all liability of Wadeco or the Subsidiaries
associated with or related to or arising out of or resulting from
the personal injury incidents that took place on or about January
4, 1996 and February 13, 1996 relating to the failures of the
centrifuges; and
(iii) any and all liability of Wadeco or the Subsidiaries
associated with or related to or arising out of or resulting
from the claims set forth in Items 1, 2, 3, 5 and 6 in Schedule
4.10;
iv. any breach or inaccuracy of any of the representations and
warranties contained in 4.13 of this Agreement, any Environmental
Deficiency, violation of Environmental Law or other environmental
matter arising or originating at or at any time prior to Closing,
whether known or unknown at the date of this Agreement;
v. any breach or inaccuracy of any of the representations and
warranties contained in Section 4.25 of this Agreement or any
liability of, or created for, the Purchaser, Wadeco or the
Subsidiaries relating to, or arising as a result of, the
Reorganization or the Excluded Transactions (other than Taxes
relating to, or arising as a result of, the Reorganization or the
Excluded Transactions which is the subject of a separate
indemnity);
vi. the breach or the failure of performance by Wadeco, the Vendor or
any of the Former Shareholders of any of the covenants, promises
or agreements that any of them is to perform under this Agreement;
and
vii. any claim or assertion that the execution or performance by the
Purchaser or any of its Affiliates of this Agreement, or any other
Transaction Documents or Reorganization Document violates or
interferes with any contractual or other right or obligation or
relationship of the Vendor, Wadeco or the Subsidiaries to or with
any other Person.
The Vendor and the Former Shareholders shall have no liability under Sections
10.1(a), (c)(i), (d) or (e) or in respect of any claim based in law or in equity
for breach of representation, warranty (other than a breach of the
representation and warranties contained in Section 4.8 of this Agreement) or
covenant unless the aggregate of all indemnifiable Losses under said subsections
or such claims exceed, in the aggregate, $250,000 (whereupon the indemnified
party shall be entitled to indemnification in full in respect of all such
indemnifiable Losses). Furthermore, it is understood and agreed that (i) the
Vendor, Hokanson, Rutherford and Russell shall not be liable for any
indemnification obligations relating specifically to D&D Enterprises or for any
breach of any representation, warranty or covenant relating specifically to D&D
Enterprises, (ii) the Vendor, Hokanson, Rutherford and Bell shall not be liable
for any indemnification obligation relating specifically to Ashtin Developments
or for any breach of
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<PAGE>
any representation, warranty or covenant relating specifically to Ashtin
Developments, and (iii) no party hereto, other than Russell, shall be liable in
the event the Purchaser incurs a loss resulting from any taxes, interest or
penalties arising as a result of Wadeco's inability to increase the adjusted
cost base of the shares in Leo's Oilfield Hauling Ltd. sold by Ashtin
Development to Wadeco as part of the Reorganization. The liability of the
Vendor, Hokanson, Bell, Russell and Rutherford under Section 10.1 or in respect
of a claim based in law or in equity for breach of representation, warranty or
covenant, shall be limited to $25,678,085 (for the Vendor), $23,873,369 (for
Hokanson), $464,933 (for Bell), $903,909 (for Russell) and $435,874 (for
Rutherford); provided however, that the aggregate liability of all such parties
hereunder shall not exceed $25,678,085. The Vendor and the Former Shareholders
shall have no liability under Section 10.1(c)(iii) unless the aggregate of all
indemnifiable Losses under such Section (including without limitation legal
costs, applicable Taxes and expenses) exceeds, in the aggregate of $200,000,
whereupon the Vendor and the Former Shareholders shall be liable for all
indemnifiable Losses in excess of $200,000.
B. INDEMNIFICATION OF THE VENDER AND THE FORMER SHAREHOLDERS
The Purchaser shall indemnify and hold harmless the Vendor and the Former
Shareholders from and against any and all Losses incurred by, borne by or
asserted against any of such indemnified parties in any way relating to, arising
out of or resulting from:
i. the breach of any of the representations or warranties made by the
Purchaser in this Agreement, or in any Schedule delivered pursuant
to this Agreement; and
ii. the breach or the failure of performance by the Purchaser of any
of the covenants, promises or agreements that the Purchaser is to
perform under this Agreement.
The Purchaser shall have no liability under this Section 10.2 or in
respect of any claim based in law or in equity for breach of representation,
warranty or covenant unless the aggregate of all indemnifiable Losses under this
Section 10.2 exceed, in the aggregate, $250,000 (whereupon the indemnified
party shall be entitled to indemnification in full in respect of all such
indemnifiable Losses).
C. THIRD PARTY CLAIMS, NOTICE AND OPPORTUNITY TO SETTLE
i. Within 20 days after the receipt by the party entitled to
indemnity hereunder (the "Indemnified Party") of any claim or
demand (including, but not limited to, notice of any action, suit
or proceeding) by any third party against an Indemnified Party
which gives rise to a right to indemnification for a Loss
hereunder, the affected Indemnified Party shall give each party
who may be obligated to provide indemnity hereunder (the
"Indemnifying Party") written notice of such claim or demand;
provided however, that the failure to give
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<PAGE>
such notice shall not relieve the Indemnifying Party of its
obligations hereunder except to the extent that such failure is
materially prejudicial to the Indemnifying Party.
ii. The Indemnifying Party shall have the right (without prejudice to
the right of any Indemnified Party to participate at its own
expense through counsel of its own choosing), to defend against
such claim or demand at its expense and through counsel of its own
choosing (the choice of such counsel to be subject to the
reasonable consent of the affected Indemnified Parties) and to
control such defense if it gives written notice of its intention
to do so within 15 days of the receipt of the notice referred to
in Section 10.3(a) above. If the Indemnifying Party shall decline
to assume the defense of such claim or demand, the affected
Indemnified Parties shall have the right to assume control of such
defense at the expense of the Indemnifying Party. The Indemnified
Parties shall cooperate fully in the defense of such claim or
demand and shall make available to the Indemnifying Party or its
counsel all pertinent information under their control relating
thereto. The Indemnifying Party agrees to cooperate with the
Indemnified Parties in order to enable their counsel to
participate in the defense and to deliver to the Indemnified
Parties copies of all pleadings and other information within the
Indemnifying Party's knowledge or possession reasonably requested
by the Indemnified Parties that is relevant to the defense of any
such claim or demand. The Indemnified Parties and their counsel
shall maintain confidentiality with respect to all such
information consistent with the conduct of a defense hereunder.
iii. The Indemnifying Party shall have the right to elect to settle
any such claim or demand for monetary damages only, subject to the
consent of the affected Indemnified Parties; provided however, if
the affected Indemnified Parties fail to give such consent within
20 days of being requested to do so, the affected Indemnified
Parties shall, at their expense, assume the defense of such claim
or demand and regardless of the outcome for such matter, the
Indemnifying Party's liability hereunder shall be limited to the
amount of any such proposed settlement.
D. NON-COMPETITION BREACH
The parties hereto acknowledge and agree that no party shall have any
liability under the terms of this Agreement in respect of any non-competition
agreement or covenant given by any person, it being the intention of the parties
hereto that a person who has entered into such agreement or covenant shall
personally remain liable under such agreement or covenant given by him or her;
provided that nothing in this Agreement shall be construed as limiting the
liability of such person under such agreement or covenant given by him or her.
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E. HOKANSON AND RUSSELL INDEMNITY
Wadeco agrees to indemnify and hold harmless Hokanson and Russell from
and against any and all Losses incurred by Hokanson or Russell in their personal
capacity as a result of being named as defendants in any of the actions
described in Section 10.1(c)(iii). For greater certainty, the parties agree
that any indemnification payment made hereunder by Wadeco shall be included in
the $200,000 amount described in Section 10.1 relating to such claims. Hokanson
and Russell acknowledge and agree that Wadeco shall have carriage of such
actions and the right to defend against such claims. Hokanson and Russell
furthermore agree to cooperate fully in the prosecutions or the defense of any
and all claims or actions relating to Wadeco, the Subsidiaries or the Former
Shareholders, as the case may be.
SECTION 11.
MISCELLANEOUS
A. AMENDMENT; WAIVER
This Agreement may be amended only by a written instrument signed by the
parties hereto. No failure to exercise and no delay in exercising, on the part
of any party, any right, remedy, power or privilege hereunder, shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law. The failure of
any party to insist upon a strict performance of any of the terms or provisions
of this Agreement, or to exercise any option, right or remedy herein contained,
shall not be construed as a waiver or as a relinquishment for the future of such
term, provision, option, right or remedy, but the same shall continue and remain
in full force and effect. No waiver by any party of any term or provision of
this Agreement shall be deemed to have been made unless expressed in writing and
signed by such party.
B. ASSIGNMENT
No party hereto shall assign or transfer or permit the assignment or
transfer of this Agreement without the prior written consent of the other
parties; provided however, that nothing contained herein shall prevent the
transfer of this Agreement or any portion hereof by the Purchaser to an
Affiliate of the Purchaser, but no such assignment shall operate to relieve the
Purchaser from any obligation, liability, indemnity, warranty, covenant, promise
or agreement hereunder.
C. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND CERTAIN INDEMNITIES
i. Regardless of the investigations, if any, any party shall have
made prior to the closing, the representations and warranties
contained herein shall be true as at the date hereof, and as at
the date of Closing, and such representations and warranties shall
survive the Closing and the benefit thereof to the other parties
hereto shall continue for a period of five years from the date of
Closing except
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for the representations and warranties in section 4.8 (taxes)
which shall survive until the expiration of the time during which
the minister of national revenue or any other governmental
authority may assess tax, interest or penalties for the taxation
year in question.
ii. Subject to Section 11.3(c) the indemnities provided for in
Sections 10.1 shall survive the Closing and shall thereafter apply
in respect of Losses for which a state of facts giving rise to a
bona fide claim for indemnity has arisen and written notice
thereof has been provided to the Vendor by an Indemnified Party
within five (5) years after the Closing; provided however, that
any claim made by the Indemnified Party to the Indemnifying Party
in writing on or before the date of expiry of such period which is
not settled within that period, shall survive the end of the
period until resolved.
iii. Notwithstanding any other provision of this Agreement, the
obligations of the Vendor and the Former Shareholders, to
indemnify under Section 10.1(b), Section 10.1(c)(ii) and Section
10.1(c)(iii) shall survive Closing indefinitely and the Vendor and
the Former Shareholders agree not to raise any time limits for
bringing an action to claim under such indemnities;
iv. The indemnities provided for in Section 10.2 shall survive the
Closing and shall thereafter apply in respect of Losses for which
a state of facts giving rise to bona fide claim for indemnity has
arisen and written notice thereof has been provided to the
Purchaser by an Indemnified Party within five (5) years after the
Closing; provided however, that any claim made by the Indemnified
Party to the Indemnifying Party in writing on or before the date
of expiry of such period which is not settled within that period,
shall survive the end of the period until resolved.
D. NOTICE
All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy) and, unless
otherwise expressly provided herein, shall be delivered during normal business
hours by hand, by Federal Express, United Parcel Service or other reputable
overnight commercial delivery service, or by telecopy notice, confirmation of
receipt received, addressed as follows, or to such other address as may be
hereafter notified by the respective parties hereto:
Wadeco:
------
6616 - 45th Street
Leduc, Alberta
T9E 7C9
Attention: The President
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Purchaser:
---------
c/o Tuboscope Vetco International Inc.
2835 Holmes Road
P.O. Box 808
Houston, Texas 77002
Attention: Mr. John Lauletta
Bell
----
1053 Falconer Road
Edmonton, Alberta
T6R 2C9
Russell
-------
226 Hampstead Place N.W.
Calgary, Alberta
T3A 5J2
Rutherford
----------
c/o 6616 - 45th Street
Leduc, Alberta
T9E 7C9
The Vendor, and Hokanson:
------------------------
J & S Hokanson Investments Ltd.
2900 - 1080 101 Street
Edmonton, Alberta
T5J 3V5
Attention: John Hokanson
With a copy in the case of the Vendor, Bell, Russell, Rutherford and Hokanson
to:
Milner Fenerty
2900 Manulife Place
10180 - 101 Street
Edmonton, AB
T5J 3V5
Attention: Mr. William L. Mouris
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E. COUNTERPARTS AND/OR FAX
This Agreement may be executed and/or delivered by fax by one or more of
the parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
F. SEVERABILITY
Any provision of this Agreement which 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 hereto, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
G. ENTIRE AGREEMENT
This Agreement, the other Transaction Documents and the Reorganization
Documents represent the agreement of the parties hereto with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by Wadeco, the Vendor or the Former Shareholders or the Purchaser
relative to the subject matter hereof not expressly set forth or referred to
herein or therein.
H. GOVERNING LAW
This Agreement and the rights and obligations of the parties under this
Agreement shall be governed by and construed in accordance with the laws of the
Province of Alberta and the laws of Canada applicable therein.
I. FURTHER ASSURANCES
Each party hereto agrees to execute any and all documents and to perform
such other acts as may be necessary or expedient to further the purposes of this
Agreement and the transactions contemplated hereby.
J. CONFIDENTIALITY
Each party hereto agrees that it will not, directly or indirectly,
disclose to any third party or use for its own purposes any information,
Intellectual Property, trade secrets or confidential data relating to the
Purchaser, Wadeco, the Subsidiaries, the Vendor or the Former Shareholders or
the businesses of any of them (including the customers of such businesses, their
operations or their methods of conducting their businesses) unless such
information has become publicly available other than through a breach of this
Agreement or has been obtained by a party from a third party without breach of
this Agreement.
44
<PAGE>
K. PUBLICITY
Wadeco, the Vender, the Former Shareholders and the Purchaser shall
cooperate with each other in the development and distribution of all news
releases and other public disclosures relating to the transactions contemplated
hereby. None of Wadeco, the Vendor, the Former Shareholders or the Purchaser
shall issue or make, or cause to have issued or made, any press release or
announcement concerning the transactions contemplated hereby without the advance
approval in writing of the form and substance thereof by the other party, unless
otherwise required by applicable law.
L. EXPENSES
Each of the parties hereto shall, whether or not the transactions
contemplated hereby are consummated, bear its own solicitors', attorneys',
accountants' or other fees, costs and expenses incurred in connection with the
negotiation, execution and performance of this Agreement or any of the
transactions contemplated hereunder.
M. BROKERS
Each party to this Agreement agrees that it will indemnify and hold
harmless the other party against any claim for brokerage, finders' fees, agents'
or investment bankers' fees or commissions in connection with the negotiation or
consummation of the transactions contemplated by this Agreement. The Vender
acknowledges and agrees that it is liable for all fees payable to Simmons &
Company in connection with transactions described herein.
N. ACCOUNTS RECEIVABLE AND LITIGATION MATTERS
i. In the event the Purchaser recovers any monies from the parties
hereto in respect of a breach of the representation and warranty
in Section 4.7(e), the Purchaser agrees to cause the assignment of
the Account Receivable that resulted in such recovery to the
Vendor.
ii. In the event the Purchaser recovers any monies from the actions
described in Section 10.1(c)(iii) in excess of $200,000 (after
deduction of all related legal costs, applicable Taxes and
expenses), such monies shall be paid to the Vendor.
O. INSURANCE
The Purchaser covenants that for a period of 5 years from and after the
Closing that it will maintain insurance on Wadeco and its operations in
accordance with standard industry practice and in amounts not less than those in
place on the time of Closing.
45
<PAGE>
P. PHOENIX PROPERTY - TITLE TRANSFER
The parties hereto acknowledge and agree to use their reasonable best
efforts to ensure that title to property in Phoenix, Arizona (that remains
registered in the name of Wadeco) becomes registered in the name of the Vendor
and any costs incurred by Wadeco in so obtaining registrations shall be paid by
the Vendor.
Q. EXHIBITS AND SCHEDULES
All Exhibits and Schedules to this Agreement are incorporated herein and
made a part hereof for all purposes. In the event of a conflict between the
Schedules or Exhibits and the terms herein, the terms of this Agreement shall
prevail and govern.
R. HEADINGS
The headings used in this Agreement are for convenience of reference only
and shall not affect the construction or interpretation of this Agreement.
S. NUMBER AND GENDER
All words importing the singular number include the plural and vice
versa, and all words importing gender include the masculine, feminine and neuter
gender.
T. ENUREMENT
This Agreement shall enure to the benefit of and shall be binding upon
the parties hereto and their respective successors, assigns, heirs, executors
and administrators.
46
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
TVI WADECO INC.
Per:______________________________________
Per:______________________________________
J & S HOKANSON INVESTMENTS LTD.
Per:______________________________________
_________________________________ __________________________________________
WITNESS JOHN HOKANSON
_________________________________ __________________________________________
WITNESS DOUGLAS BELL
_________________________________ __________________________________________
WITNESS ROBERT RUSSELL
_________________________________ __________________________________________
WITNESS RICHARD RUTHERFORD
WADECO OILFIELD SERVICES LTD.
Per:______________________________________
Per:______________________________________
47
<PAGE>
EXHIBIT 3
CONFIDENTIALITY AND NON-COMPETITION AGREEMENTS
48
<PAGE>
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
THIS AGREEMENT made as of the 31st day of May, 1996.
B E T W E E N:
WADECO OILFIELD SERVICES LTD., a body corporate incorporated under the
laws of the Province of Alberta having an office in the City of Leduc,
in the Province of Alberta (hereinafter referred to as "WADECO")
- and -
JOHN HOKANSON, an individual resident in the City of Edmonton, in the
Province of Alberta (hereinafter referred to as "Hokanson")
WHEREAS:
(A) Hokanson was a beneficial shareholder of WADECO and one of its subsidiary
companies and has been instrumental in the operation and management of
WADECO and, its subsidiaries and affiliates;
(B) there has been a change of control in the ownership of WADECO and its
subsidiaries with all of the shares of WADECO including those previously
beneficially owned, directly or indirectly, by Hokanson, having been
acquired pursuant to a share purchase agreement dated May 31, 1996 (the
"Share Purchase Agreement") between TVI Wadeco Inc. (the "Purchaser"), J &
S Hokanson Investments Ltd., John Hokanson, Douglas Bell, Robert Russell,
Richard Rutherford and WADECO and the transactions contemplated thereunder;
(C) WADECO desire assurances that Hokanson will not compete with WADECO and its
subsidiaries as herein provided; and
(D) it is a condition of the Purchaser's obligation that this agreement be
entered into as part of the Closing under the Share Purchase Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
covenants and agreements contained herein, the agreement of the Purchaser to
complete the transactions contemplated under the Share Purchase Agreement, the
sum of ONE DOLLAR ($1.00) now paid by WADECO to Hokanson and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto covenant and agree as follows:
49
<PAGE>
ARTICLE 1
COVENANT NOT TO COMPETE
1.1 Non-Compete
-----------
Hokanson hereby covenants and agrees with WADECO that for a period of five
(5) years from and after the date hereof, or such lesser period as WADECO may
determine, he will not, directly or indirectly, enter into, sponsor, promote,
foster or otherwise take part in the ownership, conduct, operation or management
of any business within any province of Canada or any state in the United States
of America in which at the time of such determination WADECO or any of its
subsidiaries has carried on business, including the carrying on of marketing
activities, of a like nature to that of providing centrifuges and other related
solids control equipment for the removal of aggregate from drilling mud and the
provision of chemical products for such operations and all business and function
necessarily incident thereto (the "Business") carried on by WADECO or any
subsidiary. Hokanson and WADECO hereby declare that if any part of this
paragraph 1.1 is unenforceable at law or in equity, then the foregoing covenant
shall be reduced in scope or amended as to term, geographical area or otherwise,
to the extent required so that the foregoing, as so reduced or amended, is
enforceable at law and in equity and the unenforceable part shall be deemed to
be severed from the balance, which balance shall survive and be of full force
and effect as between Hokanson and WADECO. Notwithstanding the foregoing,
Hokanson shall be entitled to own not more than 5 percent of the shares of any
listed public company which competes against the Business of WADECO and its
subsidiary, provided his involvement is solely as a passive investor.
ARTICLE 2
CONFIDENTIALITY
2.1 Confidentiality
---------------
Hokanson hereby covenants and agrees with WADECO that he will not, at any
time, for a period of five (5) years from the date hereof, divulge, communicate,
use to the detriment of WADECO or any of its subsidiaries or for the benefit of
any other business, firm, person, partnership or corporation, or otherwise
misuse any confidential information, data or trade secrets relating to WADECO or
any of its subsidiaries including, without limitation, information relating to
the operations of WADECO or any subsidiary of WADECO, their respective
purchasing, leasing, merchandising, promotion and compensation practices, their
production methods and customer lists and information relating to the personnel
and personnel practices and policies of WADECO or any of its subsidiaries unless
such information has already been made public through no fault of Hokanson.
Hokanson acknowledges that WADECO and its subsidiaries have proprietary
interests in the information, data and trade secrets referred to in this
paragraph 2.1 and that such information, data and trade secrets are of value to
WADECO and its subsidiaries.
50
<PAGE>
ARTICLE 3
GENERAL
3.1 Acknowledgment
--------------
The parties hereby acknowledge and confirm that:
(a) they have each been independently advised by counsel in respect of the
provisions of the various provisions of this Agreement and the effect of
such provisions;
(b) they have negotiated the provisions of this Agreement on an equal footing
based on equal bargaining power;
(c) neither party was required or induced to enter into this Agreement or the
agreement respecting the sale by Hokanson of the shares referred to in
Recital (b) above;
(d) the provisions of this Agreement will not result in the impairment of the
livelihood of Hokanson as he is fully able to utilize his skills and
knowledge in other business applications and circumstances which will not
in any way violate the provisions of this Agreement; and
(e) the provisions hereof are reasonable and do not go beyond what is necessary
to protect the interests of WADECO.
3.2 Amendment; Waiver
-----------------
This Agreement may be amended only by a written instrument signed by the
parties hereto. No failure to exercise and no delay in exercising, on the part
of any party, any right, remedy, power or privilege hereunder, shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law. The failure of
any party to insist upon a strict performance of any of the terms or provisions
of this Agreement, or to exercise any option, right or remedy herein contained,
shall not be construed as a waiver or as a relinquishment for the future of such
term, provision, option, right or remedy, but the same shall continue and remain
in full force and effect. No waiver by any party of any term or provision of
this Agreement shall be deemed to have been made unless expressed in writing and
signed by such party.
3.3 Assignment
----------
No party hereto shall assign or transfer or permit the assignment or
transfer of this Agreement without the prior written consent of the other party.
51
<PAGE>
3.4 Notice
------
All notices, requests and demands to or upon the respective parties hereto
to be effective shall be in writing (including by telecopy) and, unless
otherwise expressly provided herein, shall be delivered during normal business
hours by hand, by Federal Express, United Parcel Service or other reputable
overnight commercial delivery service, or by telecopy notice, confirmation of
receipt received, addressed as follows, or to such other address as may be
hereafter notified by the respective parties hereto:
Wadeco:
------
6616 - 45th Street
Leduc, Alberta
T9E 7C9
Attention: The President
Hokanson:
--------
2900 - 1080 101 Street
Edmonton, Alberta
T5J 3V5
Attention: John Hokanson
3.5 Counterparts
------------
This Agreement may be executed by one or more of the parties hereto on any
number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
3.6 Severability
------------
Any provision of this Agreement which 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 hereto, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
3.7 Governing Law
-------------
This Agreement and the rights and obligations of the parties under this
Agreement shall be governed by and construed in accordance with the laws of the
Province of Alberta and the laws of Canada applicable therein.
52
<PAGE>
3.8 Further Assurances
------------------
Each party hereto agrees to execute any and all documents and to perform
such other acts as may be necessary or expedient to further the purposes of this
Agreement.
3.9 Enurement
---------
This agreement shall enure to the benefit of and shall be binding upon
their respective successors, assigns, heirs, executors and administrators.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto
as of the date and year first above written.
WADECO OILFIELD SERVICES LTD.
Per:_______________________________________
Per:_______________________________________
__________________________________ ___________________________________________
Witness to the signature of JOHN HOKANSON
John Hokanson
53
<PAGE>
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
THIS AGREEMENT made as of the 31st day of May, 1996.
B E T W E E N:
WADECO OILFIELD SERVICES LTD., a body corporate incorporated under the
laws of the Province of Alberta having an office in the City of Leduc,
in the Province of Alberta (hereinafter referred to as "WADECO")
- and -
DOUGLAS BELL, an individual resident in the City of Edmonton, in the
Province of Alberta (hereinafter referred to as "Bell")
WHEREAS:
(A) Bell was a beneficial shareholder of one of the subsidiary companies of
WADECO and has been instrumental in the operation and management of WADECO
and, its subsidiaries and affiliates;
(B) there has been a change of control in the ownership of WADECO and its
subsidiaries with all of the shares of WADECO and its subsidiaries having
been acquired pursuant to a share purchase agreement dated May 31, 1996
(the "Share Purchase Agreement") between TVI Wadeco Inc. (the "Purchaser"),
J & S Hokanson Investments Ltd., John Hokanson, Douglas Bell, Robert
Russell, Richard Rutherford and WADECO and the transactions contemplated
thereunder;
(C) WADECO desire assurances that Bell will not compete with WADECO and its
subsidiaries as herein provided; and
(D) it is a condition of the Purchaser's obligation that this agreement be
entered into as part of the Closing under the Share Purchase Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
covenants and agreements contained herein, the agreement of the Purchaser to
complete the transactions contemplated under the Share Purchase Agreement, the
sum of ONE DOLLAR ($1.00) now paid by WADECO to Bell and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto covenant and agree as follows:
54
<PAGE>
ARTICLE 1
COVENANT NOT TO COMPETE
1.1 Non-Compete
-----------
Bell hereby covenants and agrees with WADECO that for a period of five (5)
years from and after the date hereof, or such lesser period as WADECO may
determine, he will not, directly or indirectly, enter into, sponsor, promote,
foster or otherwise take part in the ownership, conduct, operation or management
of any business within any province of Canada or any state in the United States
of America in which at the time of such determination WADECO or any of its
subsidiaries has carried on business, including the carrying on of marketing
activities, of a like nature to that of providing centrifuges and other related
solids control equipment for the removal of aggregate from drilling mud and the
provision of chemical products for such operations and all business and function
necessarily incident thereto (the "Business") carried on by WADECO or any
subsidiary. Bell and WADECO hereby declare that if any part of this paragraph
1.1 is unenforceable at law or in equity, then the foregoing covenant shall be
reduced in scope or amended as to term, geographical area or otherwise, to the
extent required so that the foregoing, as so reduced or amended, is enforceable
at law and in equity and the unenforceable part shall be deemed to be severed
from the balance, which balance shall survive and be of full force and effect as
between Bell and WADECO. Notwithstanding the foregoing, Bell shall be entitled
to own not more than 5 percent of the shares of any listed public company which
competes against the Business of WADECO and its subsidiary, provided his
involvement is solely as a passive investor.
ARTICLE 2
CONFIDENTIALITY
2.1 Confidentiality
---------------
Bell hereby covenants and agrees with WADECO that he will not, at any time,
for a period of five (5) years from the date hereof, divulge, communicate, use
to the detriment of WADECO or any of its subsidiaries or for the benefit of any
other business, firm, person, partnership or corporation, or otherwise misuse
any confidential information, data or trade secrets relating to WADECO or any of
its subsidiaries including, without limitation, information relating to the
operations of WADECO or any subsidiary of WADECO, their respective purchasing,
leasing, merchandising, promotion and compensation practices, their production
methods and customer lists and information relating to the personnel and
personnel practices and policies of WADECO or any of its subsidiaries unless
such information has already been made public through no fault of Bell. Bell
acknowledges that WADECO and its subsidiaries have proprietary interests in the
information, data and trade secrets referred to in this paragraph 2.1 and that
such information, data and trade secrets are of value to WADECO and its
subsidiaries.
55
<PAGE>
ARTICLE 3
GENERAL
3.1 Acknowledgment
--------------
The parties hereby acknowledge and confirm that:
(a) they have each been independently advised by counsel in respect of the
provisions of the various provisions of this Agreement and the effect of
such provisions;
(b) they have negotiated the provisions of this Agreement on an equal footing
based on equal bargaining power;
(c) neither party was required or induced to enter into this Agreement or the
agreement respecting the sale by Bell of the shares referred to in Recital
(b) above;
(d) the provisions of this Agreement will not result in the impairment of the
livelihood of Bell as he is fully able to utilize his skills and knowledge
in other business applications and circumstances which will not in any way
violate the provisions of this Agreement; and
(e) the provisions hereof are reasonable and do not go beyond what is necessary
to protect the interests of WADECO.
3.2 Amendment; Waiver
-----------------
This Agreement may be amended only by a written instrument signed by the
parties hereto. No failure to exercise and no delay in exercising, on the part
of any party, any right, remedy, power or privilege hereunder, shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law. The failure of
any party to insist upon a strict performance of any of the terms or provisions
of this Agreement, or to exercise any option, right or remedy herein contained,
shall not be construed as a waiver or as a relinquishment for the future of such
term, provision, option, right or remedy, but the same shall continue and remain
in full force and effect. No waiver by any party of any term or provision of
this Agreement shall be deemed to have been made unless expressed in writing and
signed by such party.
3.3 Assignment
----------
No party hereto shall assign or transfer or permit the assignment or
transfer of this Agreement without the prior written consent of the other party.
56
<PAGE>
3.4 Notice
------
All notices, requests and demands to or upon the respective parties hereto
to be effective shall be in writing (including by telecopy) and, unless
otherwise expressly provided herein, shall be delivered during normal business
hours by hand, by Federal Express, United Parcel Service or other reputable
overnight commercial delivery service, or by telecopy notice, confirmation of
receipt received, addressed as follows, or to such other address as may be
hereafter notified by the respective parties hereto:
Wadeco:
------
6616 - 45th Street
Leduc, Alberta
T9E 7C9
Attention: The President
Bell:
----
Mr. Douglas Bell
1053 Falconer Road
Edmonton, Alberta
T6R 2C9
3.5 Counterparts
------------
This Agreement may be executed by one or more of the parties hereto on any
number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
3.6 Severability
------------
Any provision of this Agreement which 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 hereto, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
3.7 Governing Law
-------------
This Agreement and the rights and obligations of the parties under this
Agreement shall be governed by and construed in accordance with the laws of the
Province of Alberta and the laws of Canada applicable therein.
57
<PAGE>
3.8 Further Assurances
------------------
Each party hereto agrees to execute any and all documents and to perform
such other acts as may be necessary or expedient to further the purposes of this
Agreement.
3.9 Enurement
---------
This agreement shall enure to the benefit of and shall be binding upon
their respective successors, assigns, heirs, executors and administrators.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto
as of the date and year first above written.
WADECO OILFIELD SERVICES LTD.
Per:_______________________________________
Per:_______________________________________
__________________________________ ___________________________________________
Witness to the signature of DOUGLAS BELL
Douglas Bell
58
<PAGE>
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
---------------------------------------------
THIS NON-COMPETITION AGREEMENT made the 31st day of May, 1996.
BETWEEN:
RICHARD RUTHERFORD, of Rollyview, in the Province of Alberta
(hereinafter called "the Employee")
THE FIRST PART
- and -
WADECO OILFIELD SERVICES LTD., a corporation incorporated under the
laws of the Province of Alberta (hereinafter called the "Corporation")
THE SECOND PART
WHEREAS in connection with the sale of the Employee's shares in Leo's
Oilfield Hauling Ltd. being completed as part of the Reorganization being
completed as part of the Closing, the Employee wishes to covenant with the
Corporation in the manner hereinafter set out; and
WHEREAS all terms not otherwise defined herein have the meaning set
forth in the Share Purchase Agreement made as of the 31st day of May, 1996
between TVI Wadeco Inc., J & S Hokanson Investments Ltd., John Hokanson, Douglas
Bell, Robert Russell, Richard Rutherford and Wadeco Oilfield Services Ltd.;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
Corporation completing the Reorganization and the premises herein and the sum of
One ($1.00) Dollar now paid by the Corporation to the Employee (the receipt and
sufficiency whereof is hereby acknowledged), it is agreed by and between the
parties hereto as follows:
1. The employee acknowledges that the Corporation carries on the business of
providing centrifuges and other related solids control equipment for the removal
of aggregate from drilling mud and the provision of chemical products for such
operations and all businesses and function necessarily incident thereto
(hereinafter referred to as the "Corporation's Business"). The Employee further
acknowledges that he has been entrusted with detailed confidential information
and trade secrets concerning the present and contemplated services, techniques
and modes of merchandising evolved and used by the Corporation in connection
with the Corporation's Business and concerning the customers of the
Corporation's Business, their names, addresses, tastes and preferences and
concerning employees of the Corporation's Business or applicants for employment
with the Corporation's Business, the names and addresses, the disclosure of any
of
59
<PAGE>
which detailed confidential information and trade secrets to competitors of
the Corporation or to the general public would be highly detrimental to the best
interest of the Corporation. The Employee further acknowledges and agrees that
the right to maintain confidential such detailed confidential information and
trade secrets constitutes a proprietary right which the Corporation is entitled
to protect. Accordingly, the Employee covenants and agrees with the Corporation
and the Corporation:
(a) that he will not, at any time, disclose any of such detailed
confidential information and trade secrets to any person nor shall he
use the same for any purposes other than those of the Corporation; and
(b) that, subject as herein provided, he will not (without the prior
written consent of the Corporation) at any time during the period that
the Employee is employed by the Corporation and within three (3)
years, or in the event that a court of competent jurisdiction shall
determine such period of time to be unreasonable, void or
unenforceable, such shorter period of time as such court shall deem
reasonable and enforceable, such shorter period of time as such court
shall deem reasonable and enforceable, from the date that the Employee
ceases to be employed by the Corporation either individually or in
partnership or jointly in conjunction with any person or persons,
firm, association, syndicate, company or corporation as an employee,
principal, agent, shareholder or in any other manner whatsoever carry
on or be engaged in or be concerned with or interested in or advise,
lend money to, guarantee the debts or obligations of or permit his
name or any part thereof to be used by any person or persons, firm,
association, syndicate, company or corporation engaged in or concerned
with or interested:
(i) within the Provinces of Manitoba, Saskatchewan, Alberta or
British Columbia;
(ii) within the Provinces of Saskatchewan, Alberta and British
Columbia;
(iii) within the Provinces of Saskatchewan and Alberta; and
(iv) within the Province of Alberta;
in any business similar to the Corporation's Business.
2. If any covenant or provision herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or impair
the validity of any other covenant or provision and subclauses (i), (ii), (iii),
(iv) and (v) of clause (b) of paragraph 1 hereof are declared to be separate and
distinct covenants. The Employee hereby agrees that all restrictions in
paragraph 1 are reasonable and valid in all defenses to the strict enforcement
thereof by the Corporation or the Corporation are hereby waived by the Employee.
In the event that a court of competent shall determine that the least of the
areas set out in clause (b) of paragraph 1 are unreasonable, void or
unenforceable, the area for purposes of clause (b) of paragraph 1 shall be such
smaller area as the court shall determine to be reasonable and enforceable.
60
<PAGE>
3. This Agreement shall be deemed to have been made in and shall be construed
in accordance with the laws of the Province of Alberta.
4. This Agreement shall enure to the benefit of the Company and its successors
and assigns and be binding on the Employee and his heirs, executors,
administrators, successors and assigns.
IN WITNESS WHEREOF this Agreement has been executed on the day
and year first above written.
SIGNED, SEALED AND DELIVERED in the presence of:
WITNESS
)
)
)
)
_______________________________ ) _____________________________________
WITNESS ) RICHARD RUTHERFORD
61
<PAGE>
EXHIBIT 99.1
62
<PAGE>
EXHIBIT 99.1
PRESS RELEASE CONTACT: Joe Winkler
(713) 799-5100
TUBOSCOPE VETCO INTERNATIONAL ACQUIRES WADECO OILFIELD SERVICES, LTD.
Houston, Texas, June 3, 1996, -- Tuboscope Vetco International Inc.
("Tuboscope") (NASDAQ: TUBO) today announced that it has acquired Wadeco
Oilfield Services, Ltd. ("Wadeco"), the leading provider of oilfield solids
control equipment in Canada, for total consideration of $21.6 million.
Consideration consisted of the assumption of $5.2 million in debt and cash of
$16.4 million for the stock of the privately-held company. On a pro forma
consolidated basis for the year ended April 30, 1996, Wadeco posted $2.2 million
in income and $6.0 million in earnings before depreciation, interest, taxes, and
amortization, excluding certain non-recurring items, on revenues of $13.0
million pro forma book capitalization for the Company is approximately $16.8
million.
"The acquisition of Wadeco puts Tuboscope Vetco International into the only
major oilfield solids control market where we did not have a presence," said
John F. Lauletta, President and Chief Executive Officer of Tuboscope. "By
acquiring the market leader, we enter the Canadian market with a large ongoing
operation, and further enhance Tuboscope's position as the world's leading
provider of oilfield solids control equipment." The transaction marks
Tuboscope's first acquisition since the Company merged with Drexel Oilfield
Services in April, and exemplifies its strategy of growth through acquisitions
in its major product lines. Solids control equipment and technology are used to
separate cuttings from the drilling fluids used in oil and gas drilling
operations. Both Tuboscope, through its Brandt/EPI divisions, and Wadeco have
benefitted in
63
<PAGE>
recent years from a trend to use higher technology equipment to improve drilling
efficiency and minimize the environmental impact of drilling operations. Wadeco
owns and operates a fleet of 137 centrifuges and various other pieces of solids
control equipment, which it rents to oil and gas operators and drilling
contractors across western Canada, Newfoundland, Nova Scotia, and in North
Dakota. Wadeco is based in Leduc, Alberta, with offices in Calgary, Grand
Prairie, and Estevan, Saskatchewan.
Tuboscope Veto International is the world's leading supplier of oilfield tubular
coating and inspection services, oilfield solids control equipment and services,
and coiled tubing equipment to the petroleum industry; and additionally, it
supplies in-service inspection for oil and gas pipelines; sells and leases
advanced in-line inspection equipment to the makers of oil country tubular
goods; and provides quality assurance and inspection services to a diverse range
of worldwide industries. Tuboscope is headquartered in Houston, Texas and
services markets in more than 54 countries. 1995 pro forma revenues, including
the full-year effect of its Drexel acquisition, together with acquisitions made
by Drexel in 1995, was $315 million.
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