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EXHIBIT 7.1
PURCHASE AND SALE AGREEMENT
BY AND AMONG
▇▇▇▇▇ INTERNATIONAL, INC.,
▇▇▇▇▇▇ INDUSTRIES, INC.,
CONEMSCO, INC.,
AND
CE DISTRIBUTION SERVICES, INC.
MAY 28, 1999
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TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS AND GENERAL...............................................................................1
1.1 Definitions.....................................................................................1
1.2 Construction....................................................................................5
1.3 References......................................................................................5
1.4 Headings........................................................................................5
ARTICLE 2. PURCHASE AND SALE.....................................................................................6
2.1 Purchase and Sale...............................................................................6
2.2 Purchase Price..................................................................................6
2.3 Allocation of Consideration.....................................................................7
2.4 Failure of Consent..............................................................................7
2.5 Receipts........................................................................................7
ARTICLE 3. THE CLOSING...........................................................................................8
3.1 Closing Documents...............................................................................8
3.2 Transfer Documents..............................................................................9
ARTICLE 4. CERTAIN COVENANTS.....................................................................................9
4.1 Employees in General............................................................................9
4.2 Payroll.........................................................................................9
4.3 Provisions Regarding ▇▇▇▇▇▇ Employees..........................................................10
4.4 New ▇▇▇▇▇▇ Employee Benefit Programs...........................................................11
4.5 Bulk Sales Acts................................................................................16
4.6 Allocation of Taxes............................................................................16
4.7 Further Actions................................................................................16
4.8 Expenses.......................................................................................17
4.9 Books of Account and Special Rights............................................................17
4.10 Registration Rights...........................................................................18
4.11 Financial Statements..........................................................................21
4.12 Tax Clearance Certificate.....................................................................21
ARTICLE 5. REPRESENTATIONS AND WARRANTIES.......................................................................22
5.1 ▇▇▇▇▇ and ▇▇▇▇▇▇...............................................................................22
5.2 Conemsco and CE................................................................................23
ARTICLE 6. LIABILITIES AND INDEMNIFICATION......................................................................30
6.1 ▇▇▇▇▇-▇▇▇▇▇▇ Indemnification...................................................................30
6.2 Conemsco-CE Indemnification....................................................................31
6.3 Product Liabilities............................................................................31
6.4 Settlement of Indemnities......................................................................32
6.5 No Warranty on Assets..........................................................................33
6.6 Express Negligence.............................................................................33
6.7 Damages........................................................................................33
6.8 Exclusive Remedy; Indemnification Intent.......................................................33
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ARTICLE 7. GENERAL PROVISIONS...................................................................................34
7.1 Governing Law..................................................................................34
7.2 Assignment.....................................................................................34
7.3 Counterparts...................................................................................34
7.4 Notices........................................................................................34
7.5 Litigation and Claim Support...................................................................35
7.6 Mediation-Arbitration..........................................................................35
7.7 Severability...................................................................................35
7.8 Entire Agreement...............................................................................35
7.9 Consents and Approval..........................................................................36
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PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (this "Agreement") dated as of May 28,
1999 (the "Execution Date"), is by and among ▇▇▇▇▇ International, Inc., a
Delaware corporation ("▇▇▇▇▇" or "Buyer"), ▇▇▇▇▇▇ Industries, Inc., a Texas
corporation ("▇▇▇▇▇▇"), CONEMSCO, Inc., a Delaware corporation ("Conemsco"), and
CE Distribution Services, Inc., a Delaware corporation ("CE" or "Seller").
Conemsco and CE wish to sell all of their businesses that are engaged
in the supply and distribution of materials for drilling, exploration,
production, refining and petrochemical plants and pipeline operations and their
related assets and ▇▇▇▇▇ and ▇▇▇▇▇▇ wish to purchase such businesses.
Accordingly, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS AND GENERAL.
1.1 Definitions. The capitalized terms defined in this Section 1.1,
whenever used in this Agreement, shall have the following meanings for all
purposes of this Agreement:
"Accounts Receivable" means all accounts receivable from
customers and other trade debtors, notes receivable and all other
amounts owing CE; provided, that Accounts Receivable shall not include
amounts owing to the CE Acquired Business by the shareholders or other
Affiliates of CE. Notwithstanding the foregoing, the term "Accounts
Receivable" with respect to the CE Assets will not include any accounts
receivable, notes receivable or other amounts owing and reflected on
the books and records of CE Franklin.
"Act" means the U.S. Securities Act of 1933, as amended.
"Affiliate" means, with respect to any Person, any Person
that, directly or indirectly, controls, is controlled by, or is under
common control with, such Person. The term "control" (including the
terms "controlled by" and "under common control with") as used in this
definition means the possession, directly or indirectly, of the power
to direct or cause the direction of management and policies of a
Person, whether through the ownership of voting securities, by contract
or otherwise.
"Assignment Agreement" means that certain Assignment,
Assumption and Amended and Restated Note Agreement dated as of March
31, 1999 between ▇▇▇▇▇ International, Inc. and the insurance companies
named therein.
"Assumed CE Medical Liability" means the balance sheet
accruals as of the Closing Date for the medical and dental liability of
CE.
"CE Acquired Business" means all of the businesses that
comprise the supply and distribution operations of CE related to the
supply and distribution of materials for drilling, exploration,
production, refining and petrochemical plants and pipeline operations,
but excluding businesses related to tubulars.
"CE Assets" has the meaning given such term in Section 2.1.
"CE Assumed Liabilities" means (a) any liability attributable
to the ownership and operation of the CE Acquired Business after the
Closing Date (i) under any contract or other
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agreement arising in the ordinary course of business of the CE Acquired
Business or (ii) from the ownership, use, possession or operation of
the CE Acquired Business, (b) any liability or obligation that is
accrued for on the CE Closing Statement in an amount equal to such
accrual and any obligation or liability incurred in the ordinary course
of business after April 30, 1999 by CE in the conduct of the CE
Acquired Business and (c) any liability for the CE Warranty and
Warranty Service.
"CE Closing Statement" has the meaning given such term in
Section 5.2(e).
"CE Environmental Liabilities" has the meaning given such term
in Section 6.1(a)(i).
"CE Excluded Assets" has the meaning given such term in
Section 2.1(a)(xii).
"CE Excluded Liabilities" means all of the liabilities and
obligations other than the CE Assumed Liabilities related to the CE
Acquired Business or the CE Assets to the extent attributable to the
period prior to the Closing Date.
"CE Franklin" means CE Franklin Ltd., an Alberta corporation.
"CE Franklin Shares" means the 8,568,653 common shares of CE
Franklin owned by Conemsco.
"CE Indemnified Liabilities" has the meaning given such term
in Section 6.2.
"CE Indemnified Parties" means each of Conemsco, CE and their
Affiliates as the case may be, and each of their respective directors,
officers, employees, agents, representatives, shareholders, partners,
members and their successors and assigns.
"CE Product Liability Claim" has the meaning given such term
in Section 6.3.
"CE Profit-Sharing Plan" means the Conemsco Retirement Savings
Plan.
"CE Warranty and Warranty Service" means only repairs,
replacements or adjustments to products, installations and services
(including the labor and materials relating thereto) (i) that are
related to claims that arise under the CE Warranties and that are
asserted under the applicable warranty period, whether such products,
installations or services were sold, installed, delivered or rendered
prior to or subsequent to the Effective Time, or (ii) that arise in
connection with "recalls" initiated prior to or after the Effective
Time with respect to the operation of the CE Acquired Business.
"CE Warranties" means the warranties currently used in the
operation of the CE Acquired Business.
"Closing" means the closing of the transactions contemplated
to occur on the Closing Date.
"Closing Date" has the meaning given such term in Section 3.3.
"Code" means the United States Internal Revenue Code of 1986,
as amended.
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"Conemsco Loan Agreement" means that certain loan agreement
between CECO Holdings, Inc., Oil States Industries (UK) Limited, the
banks named therein, The First National Bank of Chicago and ▇▇▇▇▇ Fargo
(Texas), National Association dated as of March 31, 1998.
"Conemsco, Ltd." means Conemsco, Ltd., a company organized and
existing under the laws of the United Kingdom.
"Conemsco, Ltd. Shares" means 5,843 shares of the common
stock, no par value, of Conemsco, Ltd., which represents all of the
issued and outstanding capital stock of Conemsco, Ltd.
"Damages" means and includes, as to any Person, any loss,
cost, expense, liability, penalty or interest, or other damage,
including reasonable counsel fees and disbursements.
"Dura" means Dura Manufacturing Inc., an Alberta corporation.
"Dura Shares" means the 100 shares of Class A common stock of
Dura.
"Effective Time" has the meaning given such term in Section
3.3.
"Employees" has the meaning given such term in Section 4.1.
"Employment Agreement Liability Limit" has the meaning given
such term in Section 4.4(c).
"Employment Agreements" has the meaning given such term in
Section 4.4(c).
"Environmental, Health and Safety Requirements" means any U.S.
or non-U.S. national, federal, state or local statute, law, rule,
regulation, ordinance, code, policy or rule of common law in effect and
any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, relating
to pollution, exposure to oil, pollutants, contaminants, hazardous or
toxic materials or waste, or protection of the environment, including
laws relating to exposures, emissions, discharges, releases or
threatened releases of oil pollutants, contaminants, hazardous or toxic
materials or wastes into ambient air, surface water, ground water or
land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of oil, pollutants, contaminants, hazardous or toxic materials or
wastes; or relating to the environment, health, safety or hazardous
materials, including CERCLA, 42 U.S.C. Section 9601 et seq.; the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section
6901 et seq.; the Federal Water Pollution Control Act, as amended, 33
U.S.C. Section 1251 et seq.; the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq.; the Clean Air Act, 42 U.S.C. Section 7401
et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.;
the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
Section 5101 et seq.; the Atomic Energy Act, as amended, 42 U.S.C.
Section 2011 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, as amended, 7 U.S.C. Section 136 et seq.; and the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq., in
each case as amended from time to time, and any other U.S. or non-U.S.
national, federal, state or local laws, ordinances, rules, regulations
and publications now or hereafter relating to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the United States Securities Exchange Act
of 1934, as amended.
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"Former CE Employees" has the meaning given such term in
Section 4.2(a).
"GAAP" means generally accepted accounting principles as in
effect in the United States applied on a consistent basis.
"Indemnified Party" has the meaning given such term in Section
6.4(b).
"Indemnifying Party" has the meaning given such term in
Section 6.4(b).
"Investment Canada" means the Investment Canada Act, Chapter
I-21.8 R.S., 1985, c. 28 (1st Supp.).
"Lien" means any mortgage, pledge, security interest,
preemptive right, encumbrance, lien, claim or other charge.
"Medical Plan Excess" has the meaning given such term in
Section 4.4(d).
"New ▇▇▇▇▇▇ Domestic Employees" has the meaning given such
term in Section 4.3(a).
"New ▇▇▇▇▇▇ Employees" has the meaning given such term in
Section 4.3(a).
"New ▇▇▇▇▇▇ Foreign Employees" has the meaning given such term
in Section 4.3(a).
"New ▇▇▇▇▇▇ Foreign Severance Plan" has the meaning given such
term in Section 4.4(b)(iv).
"Notes" means, collectively, ▇▇▇▇▇ Note A and ▇▇▇▇▇ Note B.
"Permitted Liens" means any:
(i) Liens for taxes or assessments not yet
delinquent;
(ii) materialman's, mechanic's, repairman's,
employee's, contractor's, operator's, and other similar Liens
or charges arising in the ordinary course of business but only
to the extent such Liens secure obligations that, as of the
date hereof, are not due and payable; or
(iii) minor defects, irregularities in title,
easements, rights of way, servitude and similar rights that
individually or in the aggregate (A) have not had, and may not
reasonably be expected to have, an adverse effect on the
ability of the owner to own or utilize such affected property
in the manner previously owned or utilized or (B) materially
impair the value of such affected property.
"Person" means any corporation, individual, joint stock
company, joint venture, partnership, limited liability company,
unincorporated association, governmental regulatory entity, country,
state or political subdivision thereof, trust, municipality or other
entity.
"Prior Welfare Plans" has the meaning given such term in
Section 4.4(e)(iv).
"SEC" means the Securities and Exchange Commission.
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"▇▇▇▇▇ Note A" means the Senior Subordinated Promissory Note
made by ▇▇▇▇▇ payable to CE in the original face amount of $14,500,000
in the form of Exhibit 1.1(a).
"▇▇▇▇▇ Note B" means the Senior Subordinated Promissory Note
made by ▇▇▇▇▇ payable to CE in the original face amount of $15,500,000
in the form of Exhibit 1.1(b).
"▇▇▇▇▇ Shares" means the 548,527 shares of ▇▇▇▇▇ common stock,
par value $1.00 per share.
"Tax Returns" means all tax returns and tax reports that are
required to be filed with any country, state, county, city or other
political subdivision, agency, court or instrumentality.
"Transaction Documents" means this Agreement, the Notes, the
Transfer Documents and each other document, agreement, certificate,
conveyance or note executed in connection with any of the preceding and
delivered at the Closing.
"Transfer Date" has the meaning given such term in Section
4.4(g)(iii).
"Transfer Document" has the meaning given such term in Section
3.2.
"Welfare Plans Extension Period" has the meaning given such
term in Section 4.4(e)(iv).
"▇▇▇▇▇▇ Domestic Welfare Plan Program" has the meaning given
such term in Section 4.4(e)(i).
"▇▇▇▇▇▇ Foreign Welfare Plan Program" has the meaning given
such term in Section 4.4(e)(ii).
"▇▇▇▇▇▇ Indemnified Liabilities" has the meaning given such
term in Section 6. 1(a).
"▇▇▇▇▇▇ Indemnified Parties" means each of Smith, Wilson,
their Affiliates, as the case may be, and each of their respective
directors, officers, employees, agents, representatives, shareholders,
partners, members and their successors and assigns.
1.2 Construction. Words used in this Agreement, regardless of the
number or gender specifically used, shall be deemed and construed to include any
other number, singular or plural, and any other gender, masculine, feminine or
neuter, as the context shall require.
1.3 References. As used in this Agreement, unless expressly stated
otherwise, references to (a) "include" or "including" mean "including, without
limitation," and (b) a "party" mean Smith, Wilson, Conemsco, or CE and the
"parties" mean all of them. Unless otherwise specified, all references in this
Agreement to Articles, Sections and Exhibits are deemed references to the
corresponding Articles, Sections and Exhibits in, to and of this Agreement.
1.4 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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ARTICLE 2. PURCHASE AND SALE
2.1 Purchase and Sale.
(a) On the terms set forth in this Agreement, as of the
Effective Time, Seller and Conemsco (with respect to the CE Franklin
Shares listed in item (viii) below) hereby sell, assign, transfer and
convey, and Buyer hereby purchases and accepts, all of the properties
and assets (real, personal and mixed, tangible and intangible) of the
CE Acquired Business (the "CE Assets") including the following
properties and assets:
(i) the real property owned or leased as described in
Exhibit 2.1(a)(i);
(ii) the leasehold improvements of the CE Acquired
Business;
(iii) the machinery and equipment of the CE Acquired
Business;
(iv) the office furniture and fixtures and other
assets of the CE Acquired Business;
(v) the owned and leased vehicles and other rolling
stock described in Exhibit 2.1(a)(v);
(vi) the inventories, materials and supplies of the
CE Acquired Business, excluding any and all tubular assets;
(vii) the trademarks and trade names described in
Exhibit 2.1(a)(vii);
(viii) the CE Franklin Shares, the Conemsco, Ltd.
Shares and the Dura Shares;
(ix) the Accounts Receivable;
(x) the leases, licenses, supply contracts, sales
contracts, master service agreements and other contracts and
commitments of the CE Acquired Business;
(xi) all of the other assets described in Exhibit
2.1(a)(xi);
(xii) cash of the CE Acquired Business; and
(xiii) all other assets, properties, and rights of
every type and description (real, personal and mixed, tangible
and intangible) used in the conduct of the CE Acquired
Business as of the Effective Time, except those CE Excluded
Assets, properties and rights as set forth in Exhibit
2.1(a)(xii) (collectively, the "CE Excluded Assets").
(b) As additional consideration for the sale of the CE Assets,
Buyer hereby assumes and agrees to timely discharge the CE Assumed
Liabilities as of the Effective Time. Except as otherwise provided in
this Agreement, Buyer and ▇▇▇▇▇▇ shall not assume, or be deemed to have
assumed, pursuant to this Agreement, any obligation or liability of
Conemsco, CE or their subsidiaries other than the CE Assumed
Liabilities.
2.2 Purchase Price. The purchase price to be paid by Buyer to Seller
and Conemsco for the purchase and sale of the CE Assets shall be $54,741,986
(the "Purchase Price") payable as follows:
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(a) $24,741,986 shall be payable by ▇▇▇▇▇'▇ delivery of the
▇▇▇▇▇ Shares to Seller;
(b) $14,500,000 shall be payable by ▇▇▇▇▇'▇ delivery of the
▇▇▇▇▇ Note A to Seller; and
(c) $15,500,000 shall be payable by ▇▇▇▇▇'▇ delivery of the
▇▇▇▇▇ Note B to Seller.
2.3 Allocation of Consideration. The Purchase Price shall be allocated
among the CE Assets as follows: (a) the value of ▇▇▇▇▇ Shares shall be allocated
to the CE Franklin Shares and (b) the balance of consideration shall be
allocated to the remaining Acquired Assets in accordance with Schedule 2.3.
Buyer and Seller agree (a) that the allocations set forth in Schedule
2.3 have been made in accordance with Section 1060 of the Internal Revenue Code
of 1986, as amended (the "Code"); (b) to treat and report for tax purposes the
transactions contemplated by this Agreement in a manner consistent with such
allocation; and (c) not to take any action for tax purposes inconsistent with
such allocation or such obligation.
2.4 Failure of Consent. To the extent that the assignment or transfer
of any shares of stock, contracts, licenses, leases, commitments, sales orders,
purchase orders or other assets or rights to be transferred or assigned to Buyer
and, after the Closing to ▇▇▇▇▇▇ as provided herein, shall require the consent
of the other party or parties thereto, or the consent of any other Person, this
Agreement shall not constitute an agreement to transfer or assign the same if an
attempted assignment or transfer would constitute a breach thereof or violation
of law. Subject to any other provision or condition herein dealing with specific
consents, if such consent is not obtained, CE and Conemsco will cooperate in all
reasonable respects with Buyer and ▇▇▇▇▇▇ (or any subsidiary of ▇▇▇▇▇▇) to
secure a reasonable mutually agreeable arrangement designed to provide ▇▇▇▇▇▇
(or such subsidiary) with the benefits of any such shares of stock, contracts,
licenses, leases, commitments, sales orders, purchase orders, or other assets or
rights including enforcement for the benefit of ▇▇▇▇▇▇ (or such subsidiary) of
any and all rights of the party against the other party or parties thereto
arising out of the breach or cancellation by such other party or parties or
otherwise.
2.5 Receipts. Subject to the terms hereof, (a) all monies, proceeds,
receipts, credits and income attributable to (i) the CE Acquired Business shall
be the sole property and entitlement of Buyer, and, to the extent received by
Seller, Seller shall fully disclose, account for and transmit same to Buyer
promptly and (ii) the CE Excluded Assets shall be the sole property and
entitlement of Seller and, to the extent received by Buyer, Buyer shall fully
disclose, account for and transmit same to Seller promptly and (b) any payments
or disbursements related to trade or accounts payable or similar charges (i)
related to the CE Acquired Business inadvertently made by Seller after the
Closing Date, will be reimbursed by Buyer upon Seller providing Buyer with
reasonable documentation supporting Seller's claim that such payment should have
been for the account of Buyer, in accordance with the terms hereof, and that
such payable or charge has actually been paid by Seller and (ii) related to the
CE Excluded Assets inadvertently made by Buyer after the Closing Date, will be
reimbursed by Seller upon Buyer providing Seller with reasonable documentation
supporting Buyer's claim that such payment should have been for the account of
Seller, in accordance with the terms hereof, and that such payable or charge has
actually been paid by Buyer. In addition, the parties will provide each other
with access to records and assist in providing the other parties with
information regarding receivables and payables related to the CE Acquired
Business and the CE Excluded Assets.
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ARTICLE 3. THE CLOSING
3.1 Closing Documents. At the Closing, the following actions shall
occur:
(a) ▇▇▇▇▇ shall deliver to Conemsco a stock certificate
representing the ▇▇▇▇▇ Shares;
(b) ▇▇▇▇▇ shall deliver to Seller the Notes;
(c) ▇▇▇▇▇ shall cause its counsel to deliver to Seller a legal
opinion to the effect that (i) neither the issuance of the ▇▇▇▇▇ Shares
or the Notes shall require registration under the Act, (ii) the
issuance of the Notes and the ▇▇▇▇▇ Shares does not conflict with, or
constitute a default under, any material agreement of ▇▇▇▇▇ or the
certificate of incorporation or bylaws of ▇▇▇▇▇ and (iii) the Notes
have been duly authorized, executed and delivered and are enforceable
in accordance with their terms;
(d) ▇▇▇▇▇ shall deliver to Conemsco and CE a certificate,
dated the Closing Date, from the Secretary of ▇▇▇▇▇ certifying (i) that
attached are true and correct copies of resolutions adopted by the
Board of Directors of ▇▇▇▇▇ authorizing the transactions contemplated
hereby and the execution of the Agreement and the issuance of the ▇▇▇▇▇
Shares and the Notes by the officer or representative signing on behalf
of ▇▇▇▇▇, (ii) the incumbency of the individual executing the Agreement
on behalf of ▇▇▇▇▇ and (iii) that attached are true and correct copies
of the charter documents of ▇▇▇▇▇;
(e) ▇▇▇▇▇▇ shall deliver to Conemsco and CE a certificate,
dated the Closing Date, from the Secretary of ▇▇▇▇▇▇ certifying (i)
that attached are true and correct copies of resolutions adopted by the
Board of Directors of ▇▇▇▇▇▇ authorizing the transactions contemplated
hereby by the officer or representative signing on behalf of ▇▇▇▇▇▇,
(ii) the incumbency of the individual executing the Agreement on behalf
of ▇▇▇▇▇▇ and (iii) that attached are true and correct copies of the
charter documents of ▇▇▇▇▇▇;
(f) Conemsco shall deliver to ▇▇▇▇▇ and ▇▇▇▇▇▇ a certificate,
dated the Closing Date, from the Secretary of Conemsco certifying (i)
that attached are true and correct copies of resolutions adopted by the
Board of Directors of Conemsco authorizing the transactions
contemplated hereby and the execution of the Agreement and any Transfer
Documents by the officer or representative signing on behalf of
Conemsco, (ii) the incumbency of the individual executing the Agreement
and any Transfer Document on behalf of Conemsco and (iii) that attached
are true and correct copies of the charter documents of Conemsco;
(g) CE shall deliver to ▇▇▇▇▇ and ▇▇▇▇▇▇ a certificate, dated
the Closing Date, from the Secretary of CE certifying (i) that attached
are true and correct copies of resolutions adopted by the Board of
Directors of CE authorizing the transactions contemplated hereby and
the execution of the Agreement and any Transfer Documents by the
officer or representative signing on behalf of CE, (ii) the incumbency
of the individual executing the Agreement or any Transfer Document on
behalf of CE and (iii) that attached are true and correct copies of the
charter documents of CE;
(h) CE shall deliver to ▇▇▇▇▇▇ and ▇▇▇▇▇ a certificate of
existence and good standing for each of Conemsco, Ltd. and Dura issued
by the appropriate public officials of the jurisdiction of its
incorporation each dated not more than 10 days before the Closing Date;
and
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(i) CE, ▇▇▇▇▇ and, where appropriate, one or more Affiliates
of CE and ▇▇▇▇▇, shall execute and deliver one or more General
Conveyance of Assets and Assumption of Liabilities Agreements in
substantially the form set forth in Exhibit 3.1(i).
3.2 Transfer Documents. In addition to the actions contemplated by
Section 3.1, at or in connection with the Closing, the parties agree that (i)
Conemsco and CE shall execute and deliver, or cause their Affiliates to execute
and deliver, as appropriate, and/or file or record all such assignments, deeds,
bills of sale, conveyances, endorsements, and other documents substantially in
the forms attached as Exhibits 3.2-1 and 3.2-2 (any such document, a "Transfer
Document") as are required to effect the transfer and delivery to ▇▇▇▇▇ and,
after the Closing, ▇▇▇▇▇▇ of the CE Assets, and (ii) Buyer shall execute and
deliver such instruments as are required to effect the assumption of the CE
Assumed Liabilities by Buyer.
3.3 Closing Date, Effective Time. The closing of the transactions
contemplated under this Agreement shall take place at the offices of Gardere
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, at
10:00 a.m. on May 28, 1999 (the "Closing Date"). The purchase and sale of the CE
Assets and the assumption of the CE Assumed Liabilities shall for all purposes
be deemed to have taken place and to be effective at 12:01 a.m. on the Closing
Date (the "Effective Time").
ARTICLE 4. CERTAIN COVENANTS
4.1 Employees in General. Employees of the CE Acquired Business who are
actively employed immediately prior to the Effective Time (collectively
"Employees") shall be offered employment with ▇▇▇▇▇▇ effective as of the
Effective Time. Effective on or after the Effective Time, ▇▇▇▇▇▇ shall have the
right to terminate any of its employees, with or without cause, except as
otherwise may be agreed by Wilson, Smith, CE and Conemsco, and subject to any
applicable legal restrictions.
4.2 Payroll.
(a) Payroll Processing Services by CE. For a period not to
exceed 90 days after the Effective Time or such longer period as agreed
to by CE and ▇▇▇▇▇▇, ▇▇, acting as agent for, and in the name of,
▇▇▇▇▇▇, shall provide payroll processing services with respect to all
employees of ▇▇▇▇▇▇, who were employees of the CE Acquired Business on
the day before the Effective Time (the "Former CE Employees"). As agent
for ▇▇▇▇▇▇, ▇▇ shall withhold any amounts required to be withheld from
the wages of the Former CE Employees, shall timely deposit taxes
withheld on behalf of ▇▇▇▇▇▇, shall timely pay any employment taxes due
by ▇▇▇▇▇▇, with respect to the Former CE Employees, and as soon as
administratively practicable following each payroll date, shall pay to
▇▇▇▇▇▇, or to its designees which have been identified to CE in writing
by ▇▇▇▇▇▇, any amounts withheld from the wages of the Former CE
Employees representing contributions for employee benefit plans. CE, as
agent, shall furnish ▇▇▇▇▇▇ with all necessary information regarding
wages paid to the Former CE Employees, and the amounts withheld from
such wages, by CE, as agent, on or after the Effective Time.
(b) Payroll Processing Services Costs of CE. Until notified
otherwise in writing by ▇▇▇▇▇▇, ▇▇, as payroll agent, shall be entitled
to assume that there has been no change in any employee's salary,
wages, withholding status, retirement plan, profit-sharing plan and
welfare benefit elections or any other factor affecting payroll
calculations. Except as specifically provided to the contrary herein,
▇▇▇▇▇▇ shall bear the costs of all salaries, wages, employment taxes,
or other amounts due with respect to services performed by the
employees of ▇▇▇▇▇▇, at and after the Effective Time, and shall
promptly on demand reimburse CE for all out of pocket
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costs incurred by CE in providing the payroll processing services
described above unless such out of pocket costs incurred resulted from
CE's gross negligence or willful misconduct.
(c) Assumption of Payroll Responsibility by ▇▇▇▇▇▇. On the
91st day after the Effective Time or such later time as agreed to by CE
and ▇▇▇▇▇▇, or such earlier time as ▇▇▇▇▇▇ desires (as evidenced by
written notice to CE), ▇▇▇▇▇▇ shall assume direct responsibility for
the payroll of the Former CE Employees, and CE agrees to take such
actions and furnish such information as may be necessary to enable
▇▇▇▇▇▇ to assume such responsibilities.
4.3 Provisions Regarding ▇▇▇▇▇▇ Employees.
(a) Employees. ▇▇▇▇▇▇ shall accept the transfer of employment
as of the Effective Time of all Employees. Employees accepting
employment with ▇▇▇▇▇▇ as of the Effective Time who are employed in the
United States shall be referred to as "New ▇▇▇▇▇▇ Domestic Employees"
hereinafter. Employees accepting such employment who are employed in a
non-U.S. country (other than U.S. citizens) shall be referred to as
"New ▇▇▇▇▇▇ Foreign Employees"' hereinafter. New ▇▇▇▇▇▇ Domestic
Employees and New ▇▇▇▇▇▇ Foreign Employees shall be referred to
collectively as "New ▇▇▇▇▇▇ Employees" hereinafter. Unless otherwise
expressly provided herein or under applicable law, or as the parties
otherwise may agree, the terms and conditions of employment of ▇▇▇▇▇▇
employees shall be determined by ▇▇▇▇▇▇. CE agrees that, except with
the prior written consent of ▇▇▇▇▇▇ prior to the Effective Time CE will
use its commercially reasonable efforts to keep available the services
of the present officers and key employees of the CE Acquired Business.
(b) Certain Employees Claims and Charges.
(i) For those employment-related claims that are not
CE Assumed Liabilities, if any affirmative action (such as
promotion, transfer and/or reinstatement) is required by
reason of judicial determination, ▇▇▇▇▇▇ shall take such
affirmative action, provided that CE, with respect to an
action involving an employee or a former employee of the CE
Acquired Business, shall be liable for, and indemnify ▇▇▇▇▇▇
from and against, any liability, penalty, cost or expense,
including reasonable attorney fees, incurred by or imposed on
▇▇▇▇▇▇ as a result of such action (provided, however, that CE
shall not be responsible for compensation or benefit expenses
incurred after any reinstatement or promotion of any employee
except to the extent attributable to actions of CE prior to
the Effective Time). If, as part of a proposed settlement of
any such claims, the affirmative action of ▇▇▇▇▇▇ is required,
then ▇▇▇▇▇▇ shall take such affirmative action, provided that
CE, with respect to an action involving an employee or a
former employee of the CE Acquired Business, shall be liable
for, and indemnify ▇▇▇▇▇▇ from and against, any liability,
penalty, cost or expense, including reasonable attorney fees,
incurred by or imposed on ▇▇▇▇▇▇ as a result of such action.
(ii) In addition to those claims or potential claims
assumed by ▇▇▇▇▇▇ under any other provision of this Agreement,
▇▇▇▇▇▇ shall be liable for, and indemnify Conemsco and CE from
and against, any liability, penalty, cost or expense,
including reasonable attorney fees, incurred by or imposed on
a party as a result of claims by employees or former employees
of the CE Acquired Business for any alleged violation of any
statute, regulation, code, law or common law relating to the
failure of ▇▇▇▇▇▇ to offer employment or the terms of the
offer of employment, except with respect to any such
liability, penalty, cost or expense relating to or arising
from an action or inaction taken or
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failed to be taken by any party who may be entitled to
indemnification under this Section 4.3(b).
(c) No Right to Employment. Notwithstanding any other
provision of this Agreement, neither the offer of employment to any
Employee of the CE Acquired Business, nor the indemnification
provisions contained in this Agreement, shall create any third-party
beneficiary rights with respect to any such Employee. Nothing in this
Agreement, express or implied, shall confer upon any Employee, legal
representative thereof or any collective bargaining agent any rights or
remedies, including any right to employment, or continued employment
for any specified period or the benefits, terms and conditions thereof,
of any nature or kind whatsoever under or by reason of this Agreement.
The provisions of this Section 4.3(c) shall not change the parties'
obligations described in Section 4.4(b).
4.4 New ▇▇▇▇▇▇ Employee Benefit Programs.
(a) Pre-Effective Time Benefit Obligations. Unless otherwise
expressly provided herein, CE shall be solely responsible for payment
of commissions, bonuses, incentive and deferred compensation for the
current and former employees of the CE Acquired Business attributable
to service rendered prior to the Effective Time. Similarly, unless
otherwise expressly provided herein, CE shall be solely responsible for
welfare benefits (including benefits for continued health care coverage
under Section 601 et seq. of ERISA), pension benefits and any other
benefits under plans, programs, arrangements and/or personnel policies
for the current and former employees (and their eligible dependents and
beneficiaries) of the CE Acquired Business, who do not become New
▇▇▇▇▇▇ Employees and for such benefits accrued, if any, prior to the
Effective Time for or on behalf of Employees who become New ▇▇▇▇▇▇
Employees, including (i) short and long-term disability benefits,
including maintenance care for disabilities that commenced before the
Effective Time for the period that the New ▇▇▇▇▇▇ Employee or the
covered dependent remains eligible for such benefits; (ii) life and
survivor income benefits for deaths of New ▇▇▇▇▇▇ Employees' covered
dependents which occur prior to the Effective Time; and (iii)
educational assistance program benefits that were approved prior to the
Effective Time.
(b) Termination Benefits. Unless otherwise expressly provided
herein, ▇▇▇▇▇▇ shall be responsible for and hereby assumes all
liability for the payment of severance pay, if any, for any New ▇▇▇▇▇▇
Employee it terminates after the Effective Time in accordance with the
severance pay plan for similarly situated ▇▇▇▇▇▇ Employees.
(i) A New ▇▇▇▇▇▇ Domestic Employee who is
involuntarily terminated without cause during the first 60
days following the Effective Time shall receive a severance
benefit from ▇▇▇▇▇▇ determined under the terms and conditions
of the ▇▇ ▇▇▇▇▇▇▇▇▇ policy in effect or authorized as of the
day prior to the Effective Time, as described by such party in
writing to ▇▇▇▇▇▇, reduced by any amounts paid to such
Employee by ▇▇▇▇▇▇ and, if applicable, by CE under an
arrangement described in Section 4.4(c) in connection with the
Employee's termination of employment with ▇▇▇▇▇▇.
(ii) A New ▇▇▇▇▇▇ Domestic Employee who is
involuntarily terminated without cause from ▇▇▇▇▇▇ after 60
days following the Effective Time but before January 1, 2000,
shall receive the greater of (A) the severance benefit under a
severance policy having terms and conditions no less favorable
than the terms and conditions of the severance policy in
effect or authorized for similarly situated ▇▇▇▇▇▇ employees
as of the day prior to the Effective Time ("▇▇▇▇▇▇ Domestic
Severance Plan") or (B) the severance benefit that would have
been payable to such New ▇▇▇▇▇▇ Domestic Employee under the
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▇▇ ▇▇▇▇▇▇▇▇▇ policy in effect or authorized as of the day
prior to the Effective Time, reduced in either case by any
amounts paid to such Employee by ▇▇▇▇▇▇ and, if applicable, by
CE under an arrangement described in Section 4.4(c) in
connection with the Employee's termination of employment with
▇▇▇▇▇▇.
(iii) A New ▇▇▇▇▇▇ Domestic Employee who is
involuntarily terminated without cause after December 31,
1999, shall receive a severance benefit from ▇▇▇▇▇▇ determined
under the ▇▇▇▇▇▇ Domestic Severance Plan, reduced by any
amount paid to such Employee by ▇▇▇▇▇▇ under an arrangement
described in Section 4.4(c) in connection with the Employee's
termination of employment with ▇▇▇▇▇▇. Subject to the
provisions of applicable local law and subject to Sections
4.4(b)(i) and 4.4(b)(ii), the parties agree that ▇▇▇▇▇▇ or any
affiliated company sponsoring the severance plan pursuant to
which the ▇▇▇▇▇▇ Domestic Severance Plan benefits are paid,
may amend or modify the ▇▇▇▇▇▇ Domestic Severance Plan after
the Effective Time at such times and in such manner as it
deems appropriate to provide reasonable severance benefits to
its employees.
(iv) A New ▇▇▇▇▇▇ Foreign Employee who is
involuntarily terminated without cause after the Effective
Time shall receive a severance benefit from ▇▇▇▇▇▇ determined
under a severance policy having terms and conditions no less
favorable than the terms and conditions of the severance
policy of CE in effect or authorized with respect to such
employees as of the day prior to the Effective Time, ("New
▇▇▇▇▇▇ Foreign Severance Plan"); provided, however, that such
New ▇▇▇▇▇▇ Foreign Employee's severance pay and other
termination benefits shall be as required under applicable
local law, including to the extent appropriate, applicable
Canadian provincial laws. Subject to the provisions of
applicable local law, the parties agree that ▇▇▇▇▇▇ may amend
or modify the New ▇▇▇▇▇▇ Foreign Severance Plan after the
Effective Time at such times and in such manner as it deems
appropriate to provide reasonable severance benefits to its
employees.
(c) Employment Agreements and Similar Arrangements. Subject to
the limitations contained in this Section 4.4(c), ▇▇▇▇▇▇ shall assume
the obligations of CE under any employment agreements and similar
arrangements listed in Exhibit 4.4(c) that are in existence as of the
Effective Time between CE and Former CE Employees and that are assigned
to ▇▇▇▇▇▇ hereunder (collectively, the "Employment Agreements"). CE
shall assign its obligations under the Employment Agreements to ▇▇▇▇▇▇,
effective as of the Effective Time.
(d) Assumption of Certain Medical Liabilities. ▇▇▇▇▇▇ shall
reimburse CE for the payment of benefits to or on behalf of Employees
who become New ▇▇▇▇▇▇ Employees and their covered dependents for
medical and dental services or materials received before the Effective
Time and benefits for confinements that commenced before the Effective
Time, including any doctor's visits during such confinements, provided
that such benefits properly are payable under the welfare benefit plans
maintained by CE and provided further, that ▇▇▇▇▇▇ shall not reimburse
CE for any benefits in the aggregate under this Section 4.4(d) in
excess of the Assumed CE Medical Liability (the "Medical Plan Excess").
In addition, ▇▇▇▇▇▇ shall reimburse CE for the payment of benefits
under the CE welfare plans to or on behalf of Employees who become New
▇▇▇▇▇▇ Employees and their covered dependents for medical and dental
services or materials received during the period commencing on the
Effective Date and ending on the date such Employees or their covered
dependents become covered under the ▇▇▇▇▇ medical plan, provided that
such benefits properly are payable under the welfare plans maintained
by CE and provided further, that ▇▇▇▇▇▇ shall not reimburse CE for any
such benefits that are reimbursed by insurance
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coverage or otherwise. CE and Conemsco agree to continue to maintain
any insurance contract or other assets held to fund CE's benefit
obligations under its health plan, at the same levels until such time
as ▇▇▇▇▇▇ has no further obligation under this Section 4.4(d).
(e) Welfare Plans.
(i) ▇▇▇▇▇▇ agrees, on and after the Effective Time,
to provide the benefits provided for under the ▇▇▇▇▇▇ welfare
plan programs for similarly situated ▇▇▇▇▇▇ employees in
effect as of the day prior to the Effective Time, consisting
of medical, dental, hospital, life, disability and such other
similar insurance benefits for New ▇▇▇▇▇▇ Domestic Employees
(the "▇▇▇▇▇▇ Domestic Welfare Plan Program").
(ii) ▇▇▇▇▇▇ agrees, on and after the Effective Time,
to provide the benefits provided for under the ▇▇▇▇▇▇ welfare
plan programs for similarly situated ▇▇▇▇▇▇ employees in
effect as of the day prior to the Effective Time, consisting,
to the extent then available under such programs, of medical,
dental, hospital, life, disability and such other similar
insurance benefits for New ▇▇▇▇▇▇ Foreign Employees (the
"▇▇▇▇▇▇ Foreign Welfare Plan Program").
(iii) The ▇▇▇▇▇▇ Domestic Welfare Plan Program and
the ▇▇▇▇▇▇ Foreign Welfare Plan Program are referred to herein
collectively as the "▇▇▇▇▇▇ Welfare Plan Program". Eligibility
for, and the benefits under, the ▇▇▇▇▇▇ Welfare Plan Program
will be determined by ▇▇▇▇▇▇, in accordance with the
foregoing, except that the ▇▇▇▇▇▇ Welfare Plan Program, where
applicable, will:
a) waive application of its preexisting
conditions provision to any New ▇▇▇▇▇▇ Employee or
dependent thereof for any medical condition such New
▇▇▇▇▇▇ Employee or dependent thereof has as of the
Effective Time; and
b) recognize and apply to any deductibles
and copayments under medical and dental programs for
New ▇▇▇▇▇▇ Employees, any medical and dental expenses
incurred by Former CE Employees that are applied
toward their 1999 deductibles and copayments under
the applicable CE medical, dental and vision plans.
(iv) To the extent reasonably possible, if the New
▇▇▇▇▇▇ Employees are not covered under one or more of the
plans constituting the ▇▇▇▇▇▇ Welfare Plan Program, as of the
Effective Time, then effective as of the Effective Time and
until the date the New ▇▇▇▇▇▇ Employees are covered under such
plan or plans, but not later than 90 days after the Effective
Time, and the welfare benefit plans most similar to such
omitted plan or plans that are listed in Exhibit 4.4(e)(iv)
for the benefit of New ▇▇▇▇▇▇ Employees will be provided by CE
for such employees, as applicable. The welfare benefit plans
listed on such Exhibits are hereinafter called "Prior Welfare
Plans". For the period commencing on the Effective Time and
for so long as CE maintains one or more of the Prior Welfare
Plans, but not longer than the earlier of the date the New
▇▇▇▇▇▇ Employees are covered under a similar plan under the
▇▇▇▇▇▇ Welfare Plan Program or 90 days following the Effective
Time (the "Welfare Plans Extension Period"), CE shall provide
benefits under its Prior Welfare Plans for such New ▇▇▇▇▇▇
Employees. ▇▇▇▇▇▇ shall reimburse CE for all out of pocket
costs and expenses incurred by CE during the Welfare Plans
Extension Period and associated with providing benefits,
including claims paid, under the Prior Welfare Plans. CE
represents with respect to its Prior Welfare Plans that, to
the extent
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applicable, such plans comply in all material respects with
all applicable law, including the provisions of the Code and
ERISA.
(f) [Intentionally Left Blank].
(g) Pension and Retirement Plans for New ▇▇▇▇▇▇ Domestic
Employees.
(i) ▇▇▇▇▇▇ agrees to take action to enable eligible
New ▇▇▇▇▇▇ Domestic Employees to participate in the
tax-qualified retirement plan in which similarly situated
employees of ▇▇▇▇▇▇ participated as of the day prior to the
Effective Time, known as the ▇▇▇▇▇ International, Inc. 401(k)
Retirement Plan ("▇▇▇▇▇ Profit-Sharing Plan"), as soon as
administratively practicable after the Effective Time.
(ii) Each New ▇▇▇▇▇▇ Domestic Employee shall be
credited under the ▇▇▇▇▇ Profit-Sharing Plan with such
employee's period of employment with CE or Conemsco, as
applicable, for purposes of participation, vesting and
determining the date such employee may first commence payment
of benefits under the ▇▇▇▇▇ Profit-Sharing Plan.
(iii) As soon as practicable following the Closing
Date, CE shall cause to be transferred from the trustees of
the CE Profit-Sharing Plan to the trustees of the ▇▇▇▇▇
Profit-Sharing Plan an amount in cash equal to the aggregate
account balances of the Former CE Employees under the CE
Profit-Sharing Plan determined as of the transfer date (which
shall be a valuation date) (the "Transfer Date") in accordance
with the methods of valuation set forth in the CE
Profit-Sharing Plan; provided, however, that to the extent any
CE Former Employee owes any amount to the CE Profit-Sharing
Plan pursuant to the terms of a loan from such plan to such CE
Former Employee, an in-kind transfer of such loan shall be
made in lieu of the transfer of cash. From and after the date
of such transfer, ▇▇▇▇▇ shall cause the ▇▇▇▇▇ Profit-Sharing
Plan to assume the obligations of the CE Profit-Sharing Plan
with respect to benefits accrued by the CE Former Employees
under the CE Profit-Sharing Plan, and the CE Profit-Sharing
Plan shall cease to be responsible therefor; provided,
however, that prior to the transfer from the CE Profit-Sharing
Plan contemplated by this Section 4.4(g)(iii), CE shall
contribute all amounts required to be contributed to the CE
Profit-Sharing Plan for periods prior to the Transfer Date and
all other amounts that would be contributed to the CE
Profit-Sharing Plan, for such periods in the ordinary course
of the operation of such plan that are required to ensure that
the CE Profit-Sharing Plan is fully funded. CE and Conemsco
agree to indemnify ▇▇▇▇▇▇ and ▇▇▇▇▇ from and against any
liability, penalty, cost or expense, including reasonable
attorney fees, incurred or imposed on ▇▇▇▇▇▇ and ▇▇▇▇▇ related
to the CE Profit-Sharing Plan for periods prior to the
Transfer Date. ▇▇▇▇▇▇ and CE shall cooperate in making all
appropriate arrangements and filings, if any, in connection
with the transfer described above. Further, ▇▇▇▇▇▇ and CE
shall cooperate and take such actions as are necessary to
permit the continuation of loan repayments by Former CE
Employees to the CE Profit-Sharing Plan by payroll deductions
during the period beginning on the Closing Date and ending on
the date of the transfer described in this Section
4.4(g)(iii).
(iv) ▇▇▇▇▇▇ and CE agree that ▇▇▇▇▇, as plan sponsor,
may amend or modify the ▇▇▇▇▇ Profit-Sharing Plan following
the Effective Time at such times and in such manner as it
deems appropriate to provide reasonable benefits to its
employees and the employees of participating affiliates and to
maintain the tax-qualified status of the plan and for the plan
to remain in compliance with ERISA.
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(v) CE and Conemsco, with respect to the CE
Profit-Sharing Plan, represent and warrant that the plan, and
its related trust, meet, in all material respects, the
applicable requirements for qualification under Sections
401(a) and (k) and 501(a) of the Code and comply in all
material respects with applicable law, including the Code and
ERISA. CE and Conemsco agree to indemnify ▇▇▇▇▇▇ and ▇▇▇▇▇
from and against any liability, penalty, cost or expense,
including reasonable attorney fees, incurred by or imposed on
▇▇▇▇▇▇ or ▇▇▇▇▇, related to the CE Profit-Sharing Plan prior
to the Effective Time.
(vi) Except as otherwise expressly provided herein
with respect to the CE Profit-Sharing Plan, neither ▇▇▇▇▇ nor
▇▇▇▇▇▇ shall not assume any liability for or under, or
continue as the sponsor of, any pension, profit sharing, or
similar retirement program maintained by CE as of the
Effective Time or under which CE had any obligation or
liability as of or attributable to periods prior to, the
Effective Time for Employees who become New ▇▇▇▇▇▇ Domestic
Employees.
(h) Pension and Retirement Plans for New ▇▇▇▇▇▇ Foreign
Employees.
(i) New ▇▇▇▇▇▇ Foreign Employees shall participate in
the pension or other retirement plan or plans for the benefit
of similarly situated employees of ▇▇▇▇▇▇ in effect as of the
day prior to the Effective Time.
(ii) Each New ▇▇▇▇▇▇ Foreign Employee shall be
credited under the pension or other retirement plan maintained
by ▇▇▇▇▇▇ hereunder with such employee's period of employment
with CE for purposes of participation, vesting and determining
the date such employee may first commence payment of benefits
under such pension or other retirement plan.
(iii) Subject to applicable law, CE agrees that
▇▇▇▇▇▇ may amend or modify the pension or other retirement
plan maintained by ▇▇▇▇▇▇ hereunder for New ▇▇▇▇▇▇ Foreign
Employees following the Effective Time at such times and in
such manner as it deems appropriate to provide reasonable
benefits to its employees.
(i) Vacation, Compensation and Other Employee Benefits.
(i) New ▇▇▇▇▇▇ Employees shall be entitled to
vacation benefits under the appropriate ▇▇▇▇▇▇ vacation
policy, on and after the Effective Time, that are the same, to
the extent reasonably possible, as provided under the vacation
policy in effect or authorized for similarly situated
employees of ▇▇▇▇▇▇ as of the day immediately prior to the
Effective Time.
(ii) Except as otherwise expressly provided herein,
the parties agree that ▇▇▇▇▇▇ shall adopt for the New ▇▇▇▇▇▇
Employees the salary, performance incentive plan, and job
bonus structures and policies in effect or authorized for
similarly situated employees of ▇▇▇▇▇▇ as of the day
immediately prior to the Effective Time.
(iii) Except as otherwise expressly provided herein,
for purposes of the benefits provided under this Section
4.4(i), a New ▇▇▇▇▇▇ Employee's seniority shall include his or
her employment with CE (or CE's Affiliates), as applicable,
prior to the Effective Time.
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4.5 Bulk Sales Acts. CE agrees that no special notification shall be
given to its creditors under the Bulk Sales Act of any applicable jurisdiction
in connection with the transactions contemplated by this Agreement. CE agrees
promptly and diligently to pay and discharge when due or to contest and litigate
all claims (other than claims relating to the CE Assumed Liabilities) of its
creditors that are asserted against ▇▇▇▇▇ or ▇▇▇▇▇▇ by reason of any asserted
noncompliance with any such Bulk Sales Act.
4.6 Allocation of Taxes.
(a) Except as provided in Section 4.6(c), CE shall be
responsible for and shall defend, hold harmless and indemnify ▇▇▇▇▇ and
▇▇▇▇▇▇ with respect to all taxes imposed on or with respect to the CE
Acquired Business that are attributable to any taxable period or
transaction at and before the Effective Time. ▇▇▇▇▇ and ▇▇▇▇▇▇ shall be
responsible for all taxes assessable against ▇▇▇▇▇ and ▇▇▇▇▇▇,
respectively, imposed on or with respect to the CE Acquired Assets and
the CE Acquired Business that are attributable to any taxable period or
transaction after the Effective Time.
(b) CE agrees to furnish to ▇▇▇▇▇ and ▇▇▇▇▇▇, upon request, as
promptly as practicable, such information and assistance relating to
the CE Acquired Assets as is reasonably necessary for the filing of its
Tax Returns, and making of any election related to taxes, the
preparation for any audit by any taxing authority, and the prosecution
or defense of any claim, suit or proceeding relating to any Tax Return.
Each of the parties hereto shall cooperate with each other in the
conduct of any audit or other proceeding related to taxes involving the
CE Acquired Assets and shall execute and deliver such other documents
as are reasonably necessary to carry out the intent of this Section
4.6(b).
(c) Real, personal property and ad valorem taxes imposed for
taxable periods that include the Effective Time relating to property
being transferred to ▇▇▇▇▇ by CE pursuant to the terms of this
Agreement shall be prorated between CE and ▇▇▇▇▇, as of the Effective
Time based on a ratio the numerator of which is the number of days
within the taxable period preceding the Effective Time and the
denominator of which is the number of days in the taxable period.
Aggregate amounts allocated to CE pursuant to this proration shall be
reduced by the CE Assumed Liabilities for property taxes. To the extent
aggregate allocated tax exceeds the CE Assumed Liabilities, CE shall
promptly pay ▇▇▇▇▇ an amount equal to the excess. To the extent the CE
Assumed Liabilities exceed the aggregate allocated tax, ▇▇▇▇▇ shall
promptly pay CE an amount equal to the excess.
(d) To the extent liabilities for taxes are included as CE
Assumed Liabilities, ▇▇▇▇▇ or ▇▇▇▇▇▇ will make payments to the
appropriate taxing authorities on behalf of CE at the direction of CE
(except with respect to property taxes in which case ▇▇▇▇▇ or ▇▇▇▇▇▇
will make payments therefor even if such taxes have not been fully
accrued for in the CE Assumed Liabilities). Neither ▇▇▇▇▇ nor ▇▇▇▇▇▇
will make any payments in respect of tax obligations of CE in excess of
the liability amounts assumed (other than with respect to property
taxes). If within 360 days after the Closing Date, any liabilities for
taxes, other than property taxes, included as CE Assumed Liabilities
have not been paid, ▇▇▇▇▇ or ▇▇▇▇▇▇ will promptly pay CE an amount in
cash equal to the unpaid liability.
4.7 Further Actions. The parties acknowledge that the sale and transfer
of the CE Acquired Business may not occur prior to or on the Closing Date. Until
the sale and transfer is implemented in a specific foreign location, the parties
shall use their commercially reasonable best efforts to conduct the operations
of the CE Acquired Business in said specific foreign location for the benefit of
▇▇▇▇▇ and ▇▇▇▇▇▇ whether such operations be through a separate foreign
subsidiary, Affiliate or branch comprised
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totally of the CE Acquired Business or merely as a part of a foreign subsidiary,
Affiliate or branch operations of CE in said location. Each of the parties
agrees to use its commercially reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement, whether prior to or on or after the Closing Date, including
using their commercially reasonable best efforts: (i) to obtain prior to or
promptly following the Closing Date all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with such party as are necessary for the consummation of
such transaction; (ii) to effect all necessary registrations and filings; (iii)
to defend any lawsuits or other legal proceedings, whether judicial or
administrative, calling into question this Agreement or the consummation of the
transactions contemplated hereby; (iv) to furnish to the other parties such
documentation, information and assistance as reasonably may be requested in
connection with the foregoing; and (v) if any required consent of any third
party under any contract, lease or agreement shall not be obtained or if any
attempted assignment thereof would be ineffective or would impair ▇▇▇▇▇'▇ and
▇▇▇▇▇▇'▇ rights thereunder so that ▇▇▇▇▇ and ▇▇▇▇▇▇ would not in effect acquire
the benefit of all of the rights of CE to act, to the extent permitted by
applicable law, as ▇▇▇▇▇'▇ and ▇▇▇▇▇▇'▇ agent in order for ▇▇▇▇▇ or ▇▇▇▇▇▇ to
obtain or assume the benefits or obligations thereunder, and to cooperate, to
the extent permitted by applicable law, with ▇▇▇▇▇ and ▇▇▇▇▇▇ in any other
reasonable arrangement designated to obtain or assume such benefits or
obligations for ▇▇▇▇▇ and ▇▇▇▇▇▇.
4.8 Expenses.
(a) Except as otherwise specifically provided in this
Agreement, ▇▇▇▇▇ and ▇▇▇▇▇▇ shall pay (i) all expenses incurred by or
on behalf of ▇▇▇▇▇, ▇▇▇▇▇▇ or any of their Affiliates in connection
with the preparation, authorization and execution of this Agreement,
including all fees and expenses of agents, representatives, counsel and
accountants, (ii) all federal, state, local and foreign taxes arising
out of the transactions contemplated hereby required to be paid by
▇▇▇▇▇ or ▇▇▇▇▇▇ (other than those taxes, fees or charges contemplated
by Section 4.8(b)(ii) and (iii)) including, any sale, transfer or
similar taxes, if any, arising from the transactions contemplated
hereby and (iii) all amounts payable with respect to any claim for
brokerage or finders' fees or other commissions with respect to the
transactions contemplated by this Agreement based in any way on any
agreement, arrangement or understanding made by ▇▇▇▇▇, ▇▇▇▇▇▇ or any of
their Affiliates.
(b) Except as otherwise specifically provided in this
Agreement, Conemsco and CE shall pay all expenses incurred by or on
behalf of Conemsco, CE or any of their Affiliates in connection with
the preparation, authorization and execution of this Agreement, and the
conveyance, transfer, assignment and delivery of the CE Assets and the
CE Acquired Business to ▇▇▇▇▇, including all fees and expenses of
agents, representatives, counsel and accountants, (ii) all federal,
state, local and foreign taxes (other than sales taxes) and recording
fees or similar charges arising out of the conveyance, transfer,
assignment and delivery of the CE Assets and the CE Acquired Business
to ▇▇▇▇▇ and (iii) all amounts payable with respect to any claim for
brokerage or finders' fees or other commissions with respect to the
transactions contemplated by this Agreement based in any way on any
agreement, arrangement or understanding made by Conemsco, CE or any of
their Affiliates.
4.9 Books of Account and Special Rights.
(a) Except as otherwise provided in this Agreement, ▇▇▇▇▇ and
▇▇▇▇▇▇ shall not receive or utilize any rights or interest in the name
of Conemsco or any other name, logo,
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abbreviation, word or combination thereof of similar import. It is
hereby agreed that ▇▇▇▇▇ and ▇▇▇▇▇▇ may utilize, at their sole option,
the following items:
(i) Without limitation of time, ▇▇▇▇▇▇ may use
manuals, technical specifications, descriptive literature and
catalogs in existence on the Closing Date and bearing CE's or
its Affiliates' names or marks, provided that the name and
marks are stamped or overprinted with ▇▇▇▇▇▇'▇ own name or
marks;
(ii) ▇▇▇▇▇▇ shall have a period of one year after the
Closing Date within which to change the names or marks of CE
and its Affiliates on the exterior of any buildings or
leaseholds transferred to ▇▇▇▇▇▇ and to change any names or
marks of CE and its Affiliates on the motor vehicles that are
included in the CE Acquired Assets; and
(iii) ▇▇▇▇▇▇ shall have the right to sell any of the
inventories or products that are in bags or other containers
bearing any of the names or marks of CE or its Affiliates, so
long as the inventories or products sold or distributed after
180 days following the Closing Date (or such later date as the
parties agree to) are not packaged in bags or other containers
that bear such names or marks.
(b) Except as set forth in this Article 4, Conemsco and CE
will transfer to ▇▇▇▇▇▇ all of their books and records (for both
financial reporting and tax purposes) relating exclusively to the CE
Acquired Business. ▇▇▇▇▇▇ agrees to make such books and records
available to CE for inspection during the regular business hours for a
period of six years following the Closing Date, and that CE may, at its
own expense, make such copies of such books and records as it may deem
necessary. ▇▇▇▇▇▇ shall not destroy any of such books and records
without the prior written consent of CE.
4.10 Registration Rights.
(a) Registration Rights. Seller will be entitled to the
benefit of the registration rights set forth in this Section 4.10 with
respect to the ▇▇▇▇▇ Shares.
(b) Definitions. The following terms, as used in this Section
4.10, have the following meanings:
"Registration Expenses" means all expenses incident to ▇▇▇▇▇'▇
performance of or compliance with this Section 4.10, including all
registration and filing fees, messenger and delivery expenses incurred
by ▇▇▇▇▇, internal expenses incurred by ▇▇▇▇▇ (including all salaries
and expenses of its officers and employees performing legal or
accounting duties), all expenses relating to the preparation, printing,
distribution and reproduction of the registration statement and the
prospectus, the fees and expenses incurred in connection with the
listing of the ▇▇▇▇▇ Shares on any securities exchange, and fees and
disbursements of counsel for ▇▇▇▇▇ and Seller and of ▇▇▇▇▇'▇
independent public accountants.
"Resale Registration Statement" has the meaning set forth in
Section 4.10(e)(i).
"Restricted Stock" means all ▇▇▇▇▇ Shares, all shares of ▇▇▇▇▇
Common Stock evidenced by certificates delivered upon reissue or
transfer of ▇▇▇▇▇ Shares (other than certificates representing shares
sold pursuant to the Resale Registration Statement or shares sold or
disposed of in accordance with the terms of this Agreement which may,
in the opinion of counsel for ▇▇▇▇▇, after such sale or disposition be
transferred by the transferee thereof without registration
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under the Act) and all shares of ▇▇▇▇▇ Common Stock evidenced by
certificates delivered in connection with stock dividends and stock
splits attributable to ▇▇▇▇▇ Shares.
"Required Filing Date" has the meaning set forth in Section
4.10(e)(i).
"▇▇▇▇▇ Common Stock" means the common stock of ▇▇▇▇▇, par
value $ 1.00 per share.
(c) Restrictions and Restrictive Legend. All certificates
representing ▇▇▇▇▇ Shares issued hereunder shall initially be
Restricted Stock. Seller agrees that, during the time that such stock
is Restricted Stock, such stock shall have endorsed thereon a legend
substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENEDED (THE "ACT"),
OR UNDER ANY APPLICABLE STATE LAW, AND MAY NOT BE TRANSFERRED WITHOUT
REGISTRATION UNDER THE ACT OR SUCH APPLICABLE STATE LAW UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE THEREUNDER.
The ▇▇▇▇▇ Shares shall cease to be Restricted Stock on the
date two years after their date of issuance, except for such shares
then held by Affiliates of ▇▇▇▇▇ which shall cease to be Restricted
Stock after the later of two years after the date of their issuance and
three months after such person ceases to be an Affiliate of ▇▇▇▇▇. At
any time that ▇▇▇▇▇ Shares are not Restricted Stock and in connection
with a sale of such shares pursuant to the Resale Registration
Statement, ▇▇▇▇▇ shall cause any stop transfer instructions to be
rescinded and the legend endorsed on the certificates representing such
shares to be removed upon the presentation of such certificate to the
transfer agent for such purpose.
(d) Plan of Distribution. In order to provide liquidity to
Seller in connection with the transactions contemplated by this
Agreement, ▇▇▇▇▇ has agreed to file the Resale Registration Statement.
Seller acknowledges that ▇▇▇▇▇ will be required in the Resale
Registration Statement to provide a description of the methods and
plans by which Seller may distribute and resell the ▇▇▇▇▇ Shares
acquired pursuant to this Agreement. Accordingly, Seller has advised
▇▇▇▇▇, acknowledging that ▇▇▇▇▇ will rely thereon in preparation of the
Resale Registration Statement, that the ▇▇▇▇▇ Shares may be sold by or
on behalf of Seller through or to brokers or dealers, or directly to
investors pursuant to the prospectus contained in the Resale
Registration Statement (or another prospectus contained in and forming
a part of an effective registration statement under the Securities Act)
or in transactions that are exempt from the requirements of
registration under the Securities Act, at a fixed price or prices,
which may be changed from time to time, at market prices prevailing at
the time of such sale, at prices related to such market prices or at
negotiated prices, and in connection therewith distributors' or
sellers' commissions may be paid or allowed. Brokers or dealers may act
as agents for such Seller, or may purchase shares from Seller as
principal and thereafter resell such shares from time to time in or
through transactions or distributions on the New York Stock Exchange,
the London Stock Exchange or other United States or foreign stock
exchanges where trading privileges are available, in the
over-the-counter market, in private transactions or in some combination
of the foregoing.
(e) Registration Procedures. ▇▇▇▇▇ will, subject to the
provisions of this Section 4.10(e) and of Section 4.10(f), use all
commercially reasonable best efforts to effect the registration and the
sale of the ▇▇▇▇▇ Shares by Seller under the Resale Registration
Statement in accordance with the intended method of disposition thereof
described in Section 4.10(d). In connection therewith, ▇▇▇▇▇ will:
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(i) prepare and file with the SEC within seven days
after the Closing Date (the "Required Filing Date"), a "shelf"
registration statement on Form S-3 (or other appropriate form)
pursuant to Rule 415 under the Act providing for the resale
from time to time of the ▇▇▇▇▇ Shares by Seller in accordance
with the intended method of distribution thereof described in
Section 4.10(d) (the "Resale Registration Statement"), and
shall use its commercially reasonable best efforts to cause
the Resale Registration Statement to become effective as
promptly as practicable;
(ii) prepare and file with the SEC such amendments
and supplements to such Resale Registration Statement and the
prospectus contained therein as may be necessary to keep such
Resale Registration Statement effective for a period ending on
the second anniversary of the Closing Date or such shorter
period as shall terminate when all ▇▇▇▇▇ Shares covered by
such registration statement have been sold;
(iii) as soon as reasonably practicable, furnish to
Seller, prior to filing the Resale Registration Statement,
copies of such registration statement as proposed to be filed,
and thereafter furnish to such Seller such number of copies of
such Resale Registration Statement, each amendment and
supplement thereto (in each case, if specified by such Seller,
including all exhibits thereto), the prospectus included in
such Resale Registration Statement (including each preliminary
prospectus) and such other documents as such Seller may
reasonably request in order to facilitate the disposition of
▇▇▇▇▇ Shares owned by such Seller;
(iv) promptly notify the Seller at any time when a
prospectus relating thereto is required to be delivered under
the Act within the period that ▇▇▇▇▇ is required to keep the
Resale Registration Statement effective of the happening of
any event as a result of which the prospectus included in such
Resale Registration Statement (as then in effect) contains an
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
then existing, not misleading, and ▇▇▇▇▇ will promptly prepare
and file a supplement or amendment to such prospectus so that,
as thereafter delivered to the purchasers of such ▇▇▇▇▇
Shares, such prospectus will not contain an untrue statement
of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances then existing, not
misleading;
(v) promptly notify Seller of any stop order issued
by the SEC and take all reasonable actions to obtain the
removal of any such stop order; and
(vi) use its reasonable efforts to cause all such
▇▇▇▇▇ Shares to be listed on the New York Stock Exchange (or
the principal stock exchange on which the ▇▇▇▇▇ Shares are
then listed).
(f) Information from and Certain Covenants of Seller. ▇▇▇▇▇
may require Seller to furnish to ▇▇▇▇▇ such information regarding the
Seller and the distribution of such ▇▇▇▇▇ Shares as ▇▇▇▇▇ may from time
to time reasonably request in writing to carry out its obligations as
to the Resale Registration Statement. Seller agrees to notify ▇▇▇▇▇ as
promptly as practicable of any inaccuracy or change in information
previously furnished by Seller to ▇▇▇▇▇ or of the occurrence of any
event in either case as a result of which any prospectus relating to
such registration contains an untrue statement of a material fact
regarding such Seller or the distribution of such ▇▇▇▇▇ Shares or omits
to state any material fact regarding such Seller or the distribution of
such ▇▇▇▇▇ Shares required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances
then existing, and promptly to furnish to ▇▇▇▇▇ any additional
information required to correct and update any previously furnished
information or required so that such prospectus shall not contain, with
respect to such Seller or the distribution of
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such ▇▇▇▇▇ Shares, an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances then
existing, not misleading. Seller shall execute all consents, powers of
attorney and other documents reasonably required to be signed by it in
order to cause the Resale Registration Statement to become effective.
(g) Registration Expenses. All Registration Expenses will be
borne by ▇▇▇▇▇. Any broker's fee, underwriting discount and commission
applicable to the sale of ▇▇▇▇▇ Shares shall be borne by the Seller of
the ▇▇▇▇▇ Shares to which such broker's fee, discount or commission
relates, and Seller shall be responsible for all fees and expenses
incurred by Seller in connection with any registration under this
Section 4.10 other than Registration Expenses.
(h) Indemnities.
(i) ▇▇▇▇▇ and ▇▇▇▇▇▇ agree to indemnify and hold
harmless any ▇▇▇▇▇▇ Indemnified Party who has sold ▇▇▇▇▇
Shares pursuant to the Resale Registration Statement and each
Person, if any, who controls Seller or Conemsco within the
meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all Damages
arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Resale
Registration Statement or the final prospectus contained
therein relating to the ▇▇▇▇▇ Shares or in any amendment or
supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such
Damages arise out of, or are based upon, any such untrue
statement or omission or allegation thereof based upon
information furnished in writing to ▇▇▇▇▇ by Seller or on
Seller's behalf expressly for use therein.
(ii) CE and Conemsco agree to indemnify and hold
harmless any CE Indemnified Party and each Person, if any, who
controls ▇▇▇▇▇ or ▇▇▇▇▇▇ within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all Damages arising out of or based
upon any untrue statement or alleged untrue statement of a
material fact by Seller contained in the Resale Registration
Statement or the prospectus contained therein and relating to
the ▇▇▇▇▇ Shares or in any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission
by Seller to state. therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that such Damages arise out of, or are
based upon, any such untrue statement or omission or
allegation thereof based upon information furnished in writing
to ▇▇▇▇▇ by Seller or on Seller's behalf expressly for use
therein.
4.11 Financial Statements. CE agrees, and Conemsco agrees to cause CE,
to use its commercially reasonable best efforts to provide the financial
statements of CE related to the CE Acquired Business including an income
statement and a balance sheet, at and for the month ending May 31, 1999, to
▇▇▇▇▇▇ within ten days after the Closing Date prepared in accordance with GAAP.
4.12 Tax Clearance Certificate. As soon as reasonably practicable after
the Closing Date Conemsco shall, or shall cause CE, to obtain a Tax Clearance
Certificate under Section 116 of the Canadian Income Tax Act with respect to the
sale of the Dura Shares hereunder and deliver such certificate to ▇▇▇▇▇ as soon
as reasonably practicable after Conemsco's receipt thereof
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ARTICLE 5. REPRESENTATIONS AND WARRANTIES
5.1 ▇▇▇▇▇ and ▇▇▇▇▇▇. ▇▇▇▇▇ and ▇▇▇▇▇▇, jointly and severally,
represent and warrant to Conemsco, CE as follows:
(a) Organization and Standing. ▇▇▇▇▇ is a corporation duly
incorporated, validly existing and in good standing under the laws of
the State of Delaware. ▇▇▇▇▇▇ is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Texas. Each of ▇▇▇▇▇ and ▇▇▇▇▇▇ has all requisite corporate power and
authority to conduct or cause to be conducted its business as currently
conducted and to perform its respective obligations under this
Agreement and the Transaction Documents. The execution, delivery and
performance by ▇▇▇▇▇ of this Agreement and the other Transaction
Documents to which it is a party and the consummation by it of the
transactions contemplated hereby and thereby and the issuance of the
▇▇▇▇▇ Shares and Notes have been duly authorized by all necessary
corporate proceedings on its part. The execution, delivery and
performance by ▇▇▇▇▇▇ of this Agreement and the other Transaction
Documents to which it is a party and the consummation by it of the
transactions contemplated hereby, and thereby, have been duly
authorized by all necessary corporate proceedings on its part. This
Agreement and the other Transaction Documents constitute the legal,
valid and binding obligation of each of ▇▇▇▇▇ and ▇▇▇▇▇▇ to the extent
it is a party to such documents and each of such documents is
enforceable in accordance with its terms except to the extent that (i)
enforceability may be limited by bankruptcy, insolvency, reorganization
or other laws relating to or affecting the enforcement of creditors'
rights generally and (ii) courts may award money damages rather than
specific enforcement of contractual provisions involving matters other
than or in addition to the payment of money.
(b) Consents, Compliance With Other Instruments. Except as
described in Exhibit 5.1(b), the execution, delivery and performance by
each of ▇▇▇▇▇ and ▇▇▇▇▇▇ of this Agreement and the other Transaction
Documents to which it is a party and the consummation by each of such
parties of the transactions contemplated hereby and thereby and the
issuance of the ▇▇▇▇▇ Shares: (i) will not violate (with or without the
giving of notice or lapse of time or both) any provision of law, rule,
regulation, order, judgment or decree applicable to ▇▇▇▇▇ or ▇▇▇▇▇▇
except for violations that would not, individually or in the aggregate,
have a material adverse effect on the assets, business, financial
condition or results of operations of ▇▇▇▇▇▇ or ▇▇▇▇▇; (ii) will not
require any registration with, consent or approval of, or filing or
notice to, any U.S. court, tribunal, or governmental or regulatory
authority under any provision of law applicable to ▇▇▇▇▇ or ▇▇▇▇▇▇
except for (A) the requirements of the Exchange Act, (B) the
requirements of Investment Canada and (C) consents, approvals, filings
or notices that would not, if not given or made, individually or in the
aggregate, have a material adverse effect on the assets, business,
financial condition or results of operations of ▇▇▇▇▇▇ or ▇▇▇▇▇; (iii)
will not result in the creation of any Lien, other than Permitted
Liens, upon any of the properties, assets or business of ▇▇▇▇▇ or
▇▇▇▇▇▇, which Liens, individually or in the aggregate with all other
such Liens so created, would have a material adverse effect on the
assets, business, financial condition or results of operations of
▇▇▇▇▇▇ or ▇▇▇▇▇; (iv) will not violate any provision of the certificate
or articles of incorporation or bylaws of ▇▇▇▇▇ or ▇▇▇▇▇▇; and (v) will
not require any consent, approval or notice under, and will not
conflict with, or result in the breach or termination of any provision
of, or constitute a default under, or result in the acceleration of (or
give anyone the right to accelerate) the performance of, any obligation
of ▇▇▇▇▇ or ▇▇▇▇▇▇ under any material indenture, mortgage, deed of
trust, lease, preemptive rights agreement, license, franchise,
contract, agreement or other instrument to which ▇▇▇▇▇, ▇▇▇▇▇▇ or any
of their subsidiaries is a party or by which either or any of their
assets or properties are bound or encumbered.
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(c) Representations as to ▇▇▇▇▇ Shares. Upon issuance of the
▇▇▇▇▇ Shares in connection herewith, the ▇▇▇▇▇ Shares will be duly
authorized, validly issued, fully paid and non-assessable, and free and
clear of any Lien. Neither the issuance of the ▇▇▇▇▇ Shares nor the
Notes pursuant to this Agreement requires registration under the Act or
any state securities laws.
(d) Public Filings. None of the Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, nor Current Report on Form 8-K, nor any
amendment to any of the foregoing filed by ▇▇▇▇▇ with the SEC with
respect to its fiscal years ended December 31, 1998 or thereafter
contains any untrue statement of a material fact or omits to state any
material fact required to make any statement contained therein in light
of the circumstances under which they were made, not misleading. ▇▇▇▇▇
has provided to CE or made available to CE a copy of all such public
filings.
(e) Material Changes. Since March 31, 1999 there is no event
or condition, other than changes in the overall business activity of
▇▇▇▇▇ and its subsidiaries related to a general downturn in the oil,
gas and other industries in which they conduct business, which has had,
or is likely to have, a material and adverse effect on the business,
operation, management, properties or prospects, or the condition,
financial or other, or results of operation of ▇▇▇▇▇ and its
subsidiaries taken as a whole.
(f) Capital Stock. The authorized and outstanding capital
stock of ▇▇▇▇▇ is as set forth on Schedule 5.l(f). All of such
outstanding capital stock has been duly authorized and validly issued,
is fully paid and nonassessable.
5.2 Conemsco and CE. Conemsco and CE, jointly and severally, represent
and warrant to ▇▇▇▇▇ and ▇▇▇▇▇▇ as follows:
(a) Organization and Standing. Each of Conemsco and CE is a
corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate
power and authority to conduct or cause to be conducted its business
(including the ownership and operation of the CE Acquired Business) as
currently conducted and to perform its respective obligations under
this Agreement and the Transaction Documents. Each subsidiary of CE and
other Affiliate of CE that is being transferred to Buyer as a part of
the CE Acquired Business is (i) a corporation duly incorporated,
validly existing and in good standing under the laws of its
jurisdiction of incorporation or (ii) a limited liability company duly
formed, validly existing and in good standing under the laws of its
jurisdiction of formation. The execution, delivery and performance by
Conemsco of this Agreement and the other Transaction Documents to which
it is a party and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate proceedings on its part. The execution, delivery
and performance by CE of this Agreement and the consummation by it of
the transactions contemplated hereby, and thereby, have been duly
authorized by all necessary corporate proceedings on its part. This
Agreement and the other Transaction Documents constitutes the legal,
valid and binding obligation of each of Conemsco and CE to the extent
it is a party to such documents, and each of such documents is
enforceable in accordance with its terms except to the extent that (i)
enforceability may be limited by bankruptcy, insolvency, reorganization
or other laws relating to or affecting the enforcement of creditors'
rights generally and (ii) courts may award money damages rather than
specific enforcement of contractual provisions involving matters other
than or in addition to the payment of money.
(b) Consents; Compliance With Other Instruments. Except as
described in Exhibit 5.2(b), the execution, delivery and performance by
each of Conemsco and CE of this Agreement
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and the other Transaction Documents and the consummation by each of
such parties of the transactions contemplated hereby and thereby: (i)
will not violate (with or without the giving of notice or lapse of time
or both) any provision of law, rule, regulation, order, judgment or
decree applicable to Conemsco or CE except for violations that would
not, individually or in the aggregate, have a material adverse effect
on the assets, business, financial condition or results of operations
of the CE Acquired Business; (ii) will not require any registration
with, consent or approval of, or filing or notice to, any U.S. court,
tribunal, or governmental or regulatory authority under any provision
of law applicable to Conemsco or CE except for (A) the requirements of
the Exchange Act, (B) the requirements of Investment Canada, (C)
compliance with the terms and conditions of the Conemsco Loan Agreement
and (D) consents, approvals, filings or notices that would not, if not
given or made, individually or in the aggregate, have a material
adverse effect on the assets, business, financial condition or results
of operations of the CE Acquired Business; (iii) will not result in the
creation of any Lien, other than Permitted Liens, upon any of the
properties, assets or business of Conemsco, CE or the CE Acquired
Business, which Liens, individually or in the aggregate with all such
Liens so created, would have a material adverse effect on the assets,
business, financial condition or results of operations of the CE
Acquired Business; (iv) will not violate any provision of the
certificate of incorporation or bylaws of Conemsco or CE; and (v) will
not require any consent, approval or notice under, and will not
conflict with, or result in the breach or termination of any provision
of, or constitute a default under, or result in the acceleration of (or
give anyone the right to accelerate) the performance of, any obligation
of Conemsco or CE under any indenture, mortgage, deed of trust, lease,
license, franchise, contract, agreement or other instrument material to
the CE Acquired Business to which Conemsco or CE is a party or by which
either or any of their assets or properties is bound or encumbered. To
the knowledge of each of Conemsco and CE, none of Conemsco, CE or any
third-party to any indenture, mortgage, deed of trust, agreement or
other instrument to which Conemsco, CE or any of their Affiliates is a
party or by which any such party is bound or to which any such party is
subject is in breach of any of the terms, covenants, conditions or
provisions thereof, which breach would have a material adverse effect
upon the assets, business, financial condition or results of operations
of the CE Acquired Business.
(c) Title to CE Assets. CE or one of its subsidiaries has good
and indefeasible title to all of the material real properties included
in the CE Assets purported to be owned in fee, and good and
merchantable title to all of its other properties (provided that no
title warranty is made with respect to permits, rights-of-way or
easements). Except as to properties upon which no warranties are given,
upon the transfer of the CE Assets to ▇▇▇▇▇ (or to one or more
subsidiaries of ▇▇▇▇▇) pursuant to this Agreement, ▇▇▇▇▇ (or such
subsidiary) will obtain good and indefeasible or merchantable title, as
the case may be, thereto, free and clear of all Liens other than
Permitted Liens, the CE Assumed Liabilities specifically identified in
the CE Closing Statement and encumbrances specifically identified in
any Transfer Documents.
(d) Necessary Assets Except as set forth in Exhibits
2.1(a)(xii) and 5.2(d) and except for changes in the ordinary course of
business since April 30, 1999, the CE Assets comprise all of the
assets, properties and rights of every type and description (real,
personal and mixed, tangible and intangible) used by CE and its
Affiliates in the conduct of the business of the CE Acquired Business
as of the Effective Time.
(e) Financial Statements and Information. The closing
statement annexed hereto as Exhibit 5.2(e) (the "CE Closing Statement")
sets forth as of April 30, 1999, the net book value of (i) the assets,
properties and rights to be included in the CE Assets as of such date
and (ii) the Conemsco liabilities and obligations included in the CE
Assumed Liabilities accrued as of such
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date, all as determined in accordance with GAAP except to the extent
set forth on the CE Closing Statement.
(f) Exhibits. To the knowledge of Conemsco and CE, the
information set forth in the Exhibits to this Agreement furnished by
Conemsco, CE or their Affiliates is complete and correct in all
material respects and all information required to be disclosed in order
to make the Exhibits not materially misleading has been disclosed.
(g) Contracts. Exhibit 5.2(g) lists the following contracts
and agreements related to the CE Acquired Business:
(i) employment agreements (other than salesmen's
commission agreements terminable at will or within one year)
or "golden parachute" arrangements within the meaning of
Section 280G of the Code;
(ii) collective bargaining or union agreements;
(iii) bonus, stock option, incentive compensation
plans, non-qualified stock purchase plans or other welfare
benefit plans or programs;
(iv) consulting agreements with obligations in excess
of $100,000;
(v) leases with respect to real property, facilities
or equipment having a remaining term in excess of one year or
involving annual lease payments greater than $25,000;
(vi) leases with respect to data processing hardware
or software with obligations in excess of $ 100,000;
(vii) options, contracts or commitments to purchase
any fixed assets at a price in excess of $50,000;
(viii) distribution or warehousing agreements other
than those in the ordinary course of business;
(ix) sales representation, consigned stock or
sponsorship agreements other than those in the ordinary course
of business;
(x) agreements with any party for money borrowed or
loaned in excess of $100,000;
(xi) bonds, guarantees or letters of credit involving
a third party obligating the CE Acquired Business in excess of
$100,000;
(xii) license agreements, whether the CE Acquired
Business is a licensor or a licensee;
(xiii) other purchase orders or vendor commitments
having a value in excess of $250,000 or relating to purchases
to be fulfilled over a period of more than one year;
(xiv) sales contracts, customer orders and/or master
service agreements for products and services with the largest
25 customers of the CE Acquired Business;
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(xv) non-competition or other similar agreements for
the benefit of or obligating the CE Acquired Business;
(xvi) contracts or commitments, other than the
foregoing, having a term of more than one year or a value in
excess of $500,000 (including barter or counter-trade
arrangements); or
(xvii) agreements pursuant to which CE or its
Affiliates have granted any Person the exclusive right to sell
any product within a geographical region and that cannot, by
the express terms thereof, be canceled by ▇▇▇▇▇▇ after the
Closing on no more than 60 days' notice without penalty, fee
or premium of any nature (including any buy-back obligation).
Except as expressly set forth in Exhibit 5.2(g), all such agreements,
contracts and commitments are valid and in full force and effect as to the CE
Acquired Business; and CE or the CE Acquired Business, as the case may be, has
performed all material obligations required to be performed by each of them to
date and is not in default in any material respect thereunder.
(h) Absence of Certain Changes or Events. Since April 30,
1999, except as otherwise disclosed in Exhibit 5.2(h), CE (and to the
extent applicable, each of its Affiliates) has operated the CE Acquired
Business in the usual, regular and ordinary manner and, to the
knowledge of Conemsco and CE, has not:
(i) incurred any obligation or liability (contingent
or otherwise) relating to the CE Acquired Business except (x)
normal trade or business obligations incurred in the ordinary
course of business, the performance of which will not,
individually or in the aggregate, have a material adverse
effect on the assets, business, financial condition or results
of operations of the CE Acquired Business and (y) obligations
under contracts, agreements and leases required to be
disclosed in Section 2.1(a)(x), the performance of which will
not, individually or in the aggregate, have a material adverse
effect on the assets, business, financial condition or results
of operations of the CE Acquired Business;
(ii) mortgaged, pledged or subjected to any Lien
(other than Permitted Liens) any of the CE Assets (whether
tangible or intangible);
(iii) sold, assigned, transferred, conveyed, leased
or otherwise disposed of or agreed to sell, assign, transfer,
convey, lease or otherwise dispose of any of the assets or
properties of the CE Acquired Business, except for fair
consideration in the ordinary course of business;
(iv) acquired or leased (other than by a renewal of
an existing lease in the ordinary course of business) any
assets or property relating to the CE Acquired Business other
than in the ordinary course of business;
(v) waived or released any rights relating to the CE
Acquired Business other than in the ordinary course of
business;
(vi) transferred or granted any proprietary rights
relating to the CE Acquired Business under any concessions,
leases, licenses, agreements, patents, inventions, trademarks,
trade names, brandmarks or brand names, or with respect to any
know-how;
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(vii) made any material change or amendment to any
contractual obligation or made or granted any general wage or
salary increase or entered into any employment contract with
any officer or employee that CE or its Affiliates employ in
the CE Acquired Business involving an annual base rate of
compensation in excess of $100,000 or a period of employment
of more than 30 days;
(viii) made any material change or amendment to any
contractual obligation or entered into any transaction,
contract or commitment (other than this Agreement) relating to
the CE Acquired Business, other than in the ordinary course of
business;
(ix) made capital expenditures relating to the CE
Acquired Business or entered into any commitment therefor
that, in the aggregate, exceed $250,000;
(x) suffered any material adverse change in the
operations, revenues, earnings, assets, liabilities,
properties, business or condition, financial or otherwise, of
the CE Acquired Business; provided, however, that losses from
operations in the ordinary course of business of CE related to
the CE Acquired Business in amounts similar to prior months
shall not be considered a material adverse change;
(xi) lost any supplier or suppliers, which loss or
losses, individually or in the aggregate, has or may have a
material adverse effect on the assets, business, financial
condition or results of operations of the CE Acquired
Business;
(xii) introduced any material change with respect to
the operation of the CE Acquired Business or permitted the CE
Assets to be maintained other than in accordance with
customary standards;
(xiii) transferred or granted any proprietary rights
relating to the CE Acquired Business under any copyrights
other than in the ordinary course of business; or
(xiv) been charged with or advised of any violation
of the Foreign Corrupt Practices Act or any relevant
Anti-Boycott provision of U.S. law.
(i) Litigation. Except as disclosed in Exhibit 5.2(i), there
are no actions, suits or proceedings pending or, to Conemsco's or CE's
knowledge, threatened against Conemsco, CE or the CE Acquired Business
at law or in equity, or before or by any federal, state, municipal or
other governmental or nongovernmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign.
(j) Labor Controversies. Except as disclosed in Exhibit
5.2(j), there are no controversies, unresolved labor union grievances,
unfair labor practice proceedings or labor arbitration proceedings,
pending or, to Conemsco's or CE's knowledge, threatened, between CE and
any of the employees of the CE Acquired Business.
(k) Trademarks. To the best of Conemsco's and CE's knowledge,
no patents, inventions, trademarks, trade names, brandmarks, brand
names, copyrights, registrations or applications are necessary for the
conduct of the businesses of the CE Acquired Business as now conducted,
other than those listed in Exhibit 5.2(k). Except as described in
Exhibit 5.2(k), CE owns, subject to any outstanding licenses to third
parties or other agreements shown on Exhibit 2.1(a)(vii), all such
inventions, trademarks, trade names, brandmarks, brand names,
copyrights and registrations. Neither CE nor its Affiliates is a
licensor in respect of any such inventions,
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trademarks, trade names, brandmarks, brand names, copyrights or
registrations or applications therefor except as disclosed in Exhibit
5.2(k). No warranty or representation is made or implied with respect
to the validity of any such inventions, marks, copyrights or names or
with respect to the infringement of CE of any unlicensed third party
patent; however, neither CE nor its Affiliates have received notice of
any infringement of or conflict with the asserted rights of others with
respect to the use of any such rights, except as may be set forth in
Exhibit 5.2(k). To the knowledge of Conemsco and CE, CE owns or has the
right and license to use all such rights necessary to carry on the full
scope of the CE Acquired Business, and all such rights and licenses are
listed on Exhibit 2.1(a)(vii) or 5.2(k). Except as set forth on Exhibit
2.1(a)(vii) or 5.2(k), neither CE nor its Affiliates, in the conduct of
the business of the CE Acquired Business, have been placed on notice of
any violation, or has any reasonable belief that it or they are in
violation of any patent, patent license, trade name, trademark,
brandmarks, brand names or copyrights of others. To the knowledge of
Conemsco and CE, no employee of the CE Acquired Business owns, directly
or indirectly, in whole or in part, any patents, inventions,
trademarks, trade names, brandmarks, brand names, copyrights,
registrations or applications therefor or interest therein that the CE
Acquired Business has used, is currently using or the use of which is
necessary for the businesses now conducted.
(l) Licenses; Permits; Authorizations. Except as disclosed on
Exhibit 5.2(l) and to the knowledge of Conemsco and CE, the CE Assets
include all material approvals, authorizations, consents, licenses,
orders and other permits of all governmental agencies, whether federal,
state, local or foreign, required to permit the operations of the CE
Acquired Business substantially as currently conducted.
(m) Compliance with Applicable Law. Except as disclosed on
Exhibit 5.2(m) and to the knowledge of Conemsco and CE, the conduct of
the business of the CE Acquired Business does not in any material
respect violate or infringe any domestic or foreign laws (to the extent
that compliance therewith will not cause a violation of U.S. law),
statutes, ordinances, rules, regulations, codes, orders, licenses,
concessions or permits relating to any of the property thereof,
including the CE Assets, or applicable to the operations thereof
including labor, zoning, civil rights, and antitrust laws, and
Environmental, Health and Safety Requirements. Except as disclosed on
Exhibit 5.2(m) and to the knowledge of Conemsco and CE, the CE Acquired
Business has obtained all permits, licenses and other authorizations
that are required under federal, state, local and foreign laws relating
to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including ambient air,
surface water, groundwater, or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes; to
the knowledge of Conemsco and CE, the CE Acquired Business is in
material compliance with all terms and conditions of the required
permits, licenses and authorizations, and are also in material
compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and
timetables contained in those laws or contained in any regulation,
code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder related to
the CE Acquired Business; to the knowledge of Conemsco and CE, neither
CE nor its Affiliates are aware of, nor have they received notice of,
any past, present or future events, conditions, circumstances,
activities, practices, incidents, actions or plans that may interfere
with or prevent compliance or continued compliance with those laws or
any regulation, code, letter issued, entered, promulgated or approved
thereunder, or that may give rise to any common law or legal liability,
or otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, study or investigation,
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based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling, or the emission,
discharge, release or threatened release into the environment of any
pollutant, contaminant, chemical, or industrial, toxic or hazardous
substance or waste; to the knowledge of Conemsco and CE, there is no
friable asbestos nor materials containing polychlorinated biphenyls at
any of the CE Acquired Business; and, to the knowledge of Conemsco and
CE, there is no civil, criminal or administrative action, suit, demand,
claim, hearing, notice or demand letter, notice of violation,
investigation, or proceeding pending or threatened against the CE
Acquired Business relating in any way to those laws or any regulation,
code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder related to
the CE Acquired Business.
(n) Shared Facilities. As of the Effective Time, neither CE
nor any of its Affiliates will retain any facilities that were used in
the CE Acquired Business other than facilities of a deminimis nature
the retention of which by CE or its Affiliates should not have a
material adverse effect on the assets, business, financial condition or
results of operations of the CE Acquired Business.
(o) Affiliate Transactions. Exhibit 5.2(o) describes all
services and assets owned, licensed to or otherwise held by any
Affiliate of CE that have been made available or provided to or used by
the CE Acquired Business prior to the Closing Date and that are
necessary for ▇▇▇▇▇ and ▇▇▇▇▇▇ to own and operate the CE Acquired
Business or the CE Assets in the manner previously owned and operated
by CE.
(p) Welfare Plans. The welfare benefit programs and any Prior
Welfare Plans, maintained by CE or its Affiliates as of the Effective
Time, comply in all material respects with applicable law, including
with respect to each Prior Welfare Plan and CE domestic welfare benefit
program, the Code and ERISA. With respect to CE's or its Affiliates'
Prior Welfare Plans, such plans and the benefits provided pursuant to
Section 4.4 may be modified or terminated at any time and ▇▇▇▇▇ and
▇▇▇▇▇▇ are not required to continue any benefit available under a Prior
Welfare Plan.
(q) Employee Benefit Plans. Listed on Exhibit 5.2(q) are all
of the incentive, welfare, pension and retirement plans and
arrangements in effect or authorized as of the Effective Time in
respect of the Employees of the CE Acquired Business and all insurance
contracts, trusts and other funding vehicles in effect as of the
Effective Time for such plans and arrangements. Except as otherwise
expressly provided in Sections 4.4(c), 4.4(d) and 4.4(e)(iv), neither
▇▇▇▇▇ nor ▇▇▇▇▇▇ will incur any liability, cost or expense arising
from, or with respect to, any employee benefit plan, as described in
Section 3(3) of ERISA, or any similar plan or arrangement maintained,
or contributed to, by Conemsco or CE, or under which Conemsco or CE has
any obligation or liability, including any liability, cost or expense
for post-retirement health, life or other welfare benefits.
(r) Investment.
(i) Conemsco and CE are purchasing the ▇▇▇▇▇ Shares
and the Notes hereunder for their own account for investment
and with no present intention of distributing or reselling any
part thereof other than in compliance with applicable
securities laws.
(ii) Seller understands that the ▇▇▇▇▇ Shares have
not been registered (x) under the Act or (y) with the State
Securities Board of the State of Texas by reason of the
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reliance by ▇▇▇▇▇ on exemptions from the registration
requirements thereof and that Buyer's reliance is predicated
on Seller's representations set forth herein.
(iii) Seller understands that the ▇▇▇▇▇ Shares may
not be sold, transferred or otherwise disposed of without
registration under the Act or an exemption therefrom, and that
in the absence of an effective registration statement covering
the same or an available exemption from registration under the
Act, the ▇▇▇▇▇ Shares must be held indefinitely.
(iv) Seller (x) by reason of the business and
financial experience of its directors, officers and employees
has the capacity to protect its own interests in connection
with the transactions contemplated hereby and (y) is able to
bear the economic risk thereof.
(s) Cash. Since April 30, 1999, on a net basis, no cash has
been paid to, distributed to or dividended out of the CE Acquired
Business to Conemsco or its Affiliates.
ARTICLE 6. LIABILITIES AND INDEMNIFICATION
6.1 ▇▇▇▇▇-▇▇▇▇▇▇ Indemnification.
(a) ▇▇▇▇▇ and ▇▇▇▇▇▇ shall, jointly and severally, be liable
for, and hereby agree to indemnify and hold each of the CE Indemnified
Parties harmless against, any Damages with respect to any actions,
suits, proceedings, demands, assessments, claims and judgments arising
out of (collectively, the "▇▇▇▇▇▇ Indemnified Liabilities"):
(i) any breach of or inaccuracy in any of the
representations or warranties made by ▇▇▇▇▇ or ▇▇▇▇▇▇ in this
Agreement;
(ii) any breach or default in performance by ▇▇▇▇▇ or
▇▇▇▇▇▇ of any of the obligations that are to be performed by
▇▇▇▇▇ or ▇▇▇▇▇▇, respectively, under this Agreement; any
failure by ▇▇▇▇▇ or ▇▇▇▇▇▇ to duly pay, perform or discharge
the CE Assumed Liabilities; and
(iii) any aspect of ▇▇▇▇▇▇'▇ ownership, use or
operation of the CE Assets or the CE Acquired Business after
the Effective Time.
(b) ▇▇▇▇▇ and ▇▇▇▇▇▇ shall, jointly and severally, be liable
for, and hereby agree to indemnify and hold each of the CE Indemnified
Parties harmless against, any Damages with respect to any actions,
suits, proceedings, demands, assessments, claims and judgments,
pursuant to or in connection with the application of any Environmental,
Health and Safety Requirements or to the condition of the CE Acquired
Business in case of acts or omissions occurring at any time on or after
the Closing Date, specifically including acts or omissions with respect
to the on-site or off-site disposal of wastes and waste waters, or
threatened damage to the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata) at any on-site
or off-site location, occurring or alleged to have been caused, in
whole or in part, by the transportation, treatment, storage, or
disposal of any pollutant, contaminant, chemical, or industrial, toxic,
or hazardous substance or waste generated or produced in connection
with the business of the CE Acquired Business on or after the Closing
Date.
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6.2 Conemsco-CE Indemnification.
(a) Conemsco and CE shall, jointly and severally, be liable
for, and hereby agree to indemnify and hold each of the ▇▇▇▇▇▇
Indemnified Parties harmless against, any Damages with respect to any
actions, suits, proceedings, demands, assessments, claims and judgments
arising out of (collectively, the "CE Indemnified Liabilities"):
(i) any breach of or inaccuracy in any of the
representations or warranties made by Conemsco or CE in this
Agreement;
(ii) any breach or default in performance by Conemsco
or CE of any of the obligations that are to be performed by
Conemsco or CE, respectively, under this Agreement; and
(iii) except for the CE Assumed Liabilities, any
aspect of CE's ownership, use, operation or employment of the
CE Assets before the Effective Time.
(b) CE and Conemsco shall, jointly and severally, be liable
for, and hereby agree to indemnify and hold each of the ▇▇▇▇▇▇
Indemnified Parties harmless against, any Damages (other than those
attributable to the CE Assumed Liabilities to the extent accrued on the
CE Closing Statement) with respect to any actions, suits, proceedings,
demands, assessments, claims and judgments, pursuant to or in
connection with the application of any Environmental, Health and Safety
Requirements (excluding those relating solely to health and safety,
such as OSHA and any other U.S. or non-U.S. national, federal, state or
local laws, ordinances, rules, regulations or publications relating to
health and safety, the indemnification obligation for which is
described in and limited by Section 6.2(a)(i)) or to the condition of
the CE Acquired Business in case of acts or omissions occurring at any
time prior to the Closing Date, specifically including acts or
omissions with respect to the on-site or off-site disposal of wastes
and waste waters, or threatened damage to the environment (including
ambient air, surface water, groundwater, land surface or subsurface
strata) at any on-site or off-site location, occurring or alleged to
have been caused, in whole or in part, by the transportation,
treatment, storage, or disposal of any pollutant, contaminant,
chemical, or industrial, toxic, or hazardous substance or waste
generated or produced in connection with the business of the CE
Acquired Business (collectively referred to as the "▇▇▇▇▇▇
Environmental Liabilities") prior to the Closing Date. This
indemnification obligation shall apply irrespective of whether the
▇▇▇▇▇▇ Environmental Liabilities subject to this provision are known or
unknown as of the Closing Date.
6.3 Product Liabilities. CE shall remain liable (with respect to ▇▇▇▇▇
and ▇▇▇▇▇▇) for any Damages (other than those attributable to the CE Assumed
Liabilities to the extent accrued on the CE Closing Statement) that arise out of
or are based upon strict liability, negligence, or any express or implied
representation, or agreement made by CE or its Affiliates or claimed to have
been made by Conemsco or its Affiliates or imposed or asserted to be imposed by
operation of law, in each case, in connection with any occurrence or exposure
prior to the Effective Time relating to the products of CE or its Affiliates
(the foregoing being referred to herein as a "CE Product Liability Claim"), and
Conemsco or CE shall, jointly and severally, indemnify and hold harmless the
other parties from and against any Damages other than those attributable to the
CE Assumed Liabilities to the extent accrued on the CE Closing Statement)
resulting from any CE Product Liability Claim.
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6.4 Settlement of Indemnities.
(a) Except for the obligations of CE and Conemsco hereto under
Sections 4.2(b), 4.3(b), 4.4(e)(iii), 4.4(g)(iii), 4.6(a), 4.8(a)(iii),
4.8(b)(iii), 6.2(a)(ii), 6.3, the obligation of each of Conemsco and CE
to indemnify the ▇▇▇▇▇▇ Indemnified Parties shall not become effective
unless and until the Damages for the CE Indemnified Liabilities and due
to the ▇▇▇▇▇▇ Indemnified Parties, collectively, cumulate $1,000,000,
in which event Conemsco and CE jointly will be obligated, subject to
the other provisions of this Article 6, to indemnify the ▇▇▇▇▇▇
Indemnified Parties for those Damages for the CE Indemnified
Liabilities that are in excess of the initial $1,000,000 deductible;
provided, however, Damages by the CE Indemnified Parties or the ▇▇▇▇▇▇
Indemnified Parties incurred that do not exceed $5,000, whether
incurred as a result of a single incident or a series of related
incidents, shall not be included in the calculation of Damages for
purposes of determining whether an indemnification obligation exists.
The limitation contained in this Section 6.4 shall be applicable to the
health and safety indemnity set forth in Section 6.2(a)(i).
(b) If any party entitled to indemnification under this
Agreement (an "Indemnified Party") discovers any fact upon which the
Indemnified Party intends to base a claim for indemnification
hereunder, or if any claim or assertion of liability is made or
asserted by a third party against the Indemnified Party based on any
liability or assertion of a right that, if established, would
constitute a breach of any of the representations, warranties,
covenants or agreements of any of Smith, Wilson, Conemsco or CE (the
"Indemnifying Party"), in respect of which indemnification has been
provided for hereunder, the Indemnified Party shall, with reasonable
promptness, but in no case more than 60 days, give to the Indemnifying
Party written notice of such claim or assertion of liability and, to
the extent the Indemnifying Party shall give written notice to the
Indemnified Party of acceptance of the defense of such claim and the
identity of counsel selected by the Indemnifying Party, except as set
forth below, such notice to the Indemnified Party shall give the
Indemnifying Party full authority to defend, adjust, compromise or
settle, without expense to the Indemnified Party, such action, suit,
proceeding or demand of which such notice shall have been given in the
name of the Indemnified Party or otherwise as the Indemnifying Party
shall elect. The Indemnifying Party shall consult with the Indemnified
Party prior to any such compromise or settlement, and the Indemnified
Party shall have the right to refuse such compromise or settlement and,
at its sole cost, to take over such defense; provided, however, in such
event, the Indemnifying Party shall not be responsible for, nor shall
it be obligated to indemnify the Indemnified Party against, any cost
and liability in excess of such compromise or settlement. With respect
to any defense accepted by the Indemnifying Party, the Indemnified
Party shall be entitled to participate with the Indemnifying Party in
such defense and also shall be entitled to employ separate counsel for
such defense at its sole expense. In the event the Indemnifying Party
does not accept the defense of any Indemnified claim as provided above,
the Indemnified Party shall have the right to employ counsel for such
defense at the expense of the Indemnifying Party. Each of Smith,
Wilson, Conemsco, and CE agrees to cooperate with Smith, Wilson,
Conemsco or CE, as the case may be, in the defense of any such actions
and the relevant records of each party shall be available to the other
parties with respect to any such defense. None of Smith, Wilson,
Conemsco or CE will be required to provide assistance to the party
asserting the claim unless such assistance is required by law.
(c) Notwithstanding anything to the contrary in this
Agreement, no party may assert any claim for indemnification under this
Article 6 or under any other provision of this Agreement unless (i) if
such claim relates to any matter other than taxes, title to assets,
environmental matters or any covenant herein, such claim is first
asserted in accordance with the terms of this Agreement prior to the 18
month anniversary of the Closing Date, (ii) if such claim relates to
any
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environmental matter, such claim is first asserted in accordance with
the terms of this Agreement prior to the third anniversary of this
Agreement, (iii) if such claim relates to taxes or title to assets,
such claim is first asserted in accordance with terms of this Agreement
within six months after the expiration of the applicable statute of
limitations, if any, and (iv) if such claim relates to any covenant
herein, such claim is asserted in accordance with this Agreement at any
time; provided, the foregoing shall not apply to Claims arising from
the CE Assumed Liabilities or the CE Excluded Liabilities or Claims
under Section 4.10.
6.5 No Warranty on Assets. EXCEPT AS PROVIDED IN THIS AGREEMENT,
CONEMSCO AND CE MAKE NO REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED,
AS TO THE MERCHANTABILITY, QUALITY, CONDITION OR FITNESS FOR PARTICULAR USES OF
ANY OF THE CE ASSETS, ALL OF THE SAME BEING HEREBY EXPRESSLY EXCLUDED AND
DISCLAIMED.
6.6 Express Negligence. THE FOREGOING INDEMNITIES SET FORTH IN THIS
AGREEMENT ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH
THE EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING TEXAS' EXPRESS NEGLIGENCE
RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES
BECAUSE OF THE SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR
PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF ANY INDEMNIFIED PARTIES.
6.7 Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, IN NO EVENT SHALL ANY PARTY BE LIABLE TO THE OTHER FOR ANY EXEMPLARY,
PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES;
PROVIDED, HOWEVER, THAT IF ANY INDEMNIFIED PARTY IS HELD LIABLE TO A THIRD PARTY
FOR ANY OF SUCH DAMAGES AND THE INDEMNIFYING PARTY IS OBLIGATED TO INDEMNIFY THE
INDEMNIFIED PARTY FOR THE MATTER THAT GAVE RISE TO SUCH DAMAGES PURSUANT TO THIS
AGREEMENT, THEN THE INDEMNIFYING PARTY SHALL BE LIABLE FOR, AND OBLIGATED TO
REIMBURSE THE INDEMNIFIED PARTY FOR, SUCH DAMAGES.
6.8 Exclusive Remedy; Indemnification Intent.
(a) THE PARTIES AGREE THAT THE SOLE AND EXCLUSIVE REMEDY OF
ANY PARTY HERETO OR THEIR RESPECTIVE AFFILIATES WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER CLAIMS RELATING TO THE CE ACQUIRED BUSINESS, THE
EVENTS GIVING RISE TO THIS AGREEMENT AND THE TRANSACTIONS PROVIDED FOR
HEREIN OR CONTEMPLATED HEREBY OR THEREBY, SHALL BE LIMITED TO THE
INDEMNIFICATION PROVISIONS SET FORTH IN THIS AGREEMENT AND, IN
FURTHERANCE OF THE FOREGOING, EACH OF THE PARTIES, ON BEHALF OF ITSELF
AND ITS AFFILIATES, HEREBY WAIVES AND RELEASES THE OTHER PARTIES HERETO
(AND SUCH OTHER PARTIES' AFFILIATES) FROM, TO THE FULLEST EXTENT
PERMITTED UNDER ANY APPLICABLE LAW, ANY AND ALL RIGHTS, CLAIMS AND
CAUSES OF ACTION IT OR ITS AFFILIATES MAY HAVE AGAINST THE OTHER PARTY
HERETO EXCEPT AS PROVIDED HEREIN.
(b) The parties hereto intend that, even though
indemnification and other obligations appear in various sections and
articles of this Agreement, the indemnification procedures and
limitations contained in this Article 6 shall apply to all indemnity
and other obligations of the parties under this Agreement, except to
the extent expressly excluded in this Article 6.
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ARTICLE 7. GENERAL PROVISIONS
7.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas applicable to contracts made and
to be performed therein.
7.2 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties and their respective
successors and assigns, and it is not intended to confer upon any other Person
any rights or remedies hereunder, except for the Indemnified Parties expressly
identified in this Agreement but only to the extent specifically set forth in
this Agreement. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned, by any of the parties without the prior
written consent of the other parties, except that ▇▇▇▇▇ or Conemsco may at any
time assign any or all of its rights or obligations hereunder to one of its
wholly-owned subsidiaries (but no such assignment shall relieve ▇▇▇▇▇ or
Conemsco, as the case may be, of any of its obligations under this Agreement).
7.3 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
7.4 Notices. All notices, requests, demands and other communications
made in connection with this Agreement shall be in writing and shall be deemed
to have been duly given on the date delivered, if delivered personally, by
overnight delivery service or sent by facsimile machine to the Persons
identified below, or three days after mailing in the U.S. Mail if mailed by
certified or registered mail, postage prepaid, return receipt requested,
addressed as follows:
(a) if to ▇▇▇▇▇:
▇▇▇▇▇ International, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: 281.233.5996
Attn.: General Counsel
(b) if to ▇▇▇▇▇▇:
▇▇▇▇▇▇ Industries, Inc.
1301 ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: 713.237.3741
(c) if to Conemsco:
CONEMSCO, Inc.
131 ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: 713.510.2230
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(d) if to CE:
CE Distribution Services, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: 713.510.2230
with a copy to:
SCF Partners
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: 713.227.7850
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 7.4.
7.5 Litigation and Claim Support. If so requested by a party, whether
in connection with the matters set forth in Section 6 or otherwise, each of CE
and ▇▇▇▇▇▇ shall and shall cause its employees to cooperate with such party and
its Affiliates and their counsel in defending or prosecuting any litigation or
claim brought by such party against any third party or by any third party
against such party and relating to the business or properties of CE or ▇▇▇▇▇▇,
as the case may be. Cooperation shall include causing the employees of CE or
▇▇▇▇▇▇ as the case may be to furnish documents, testify as witnesses, appear for
depositions and take other similar actions as the ▇▇▇▇▇▇ Indemnified Parties or
the CE Indemnified Parties may reasonably request.
7.6 Mediation-Arbitration. If a dispute arises from or relates to this
Agreement or the breach thereof and if the dispute cannot be settled through
direct discussions, the parties agree to endeavor first to settle the dispute in
an amicable manner by mediation administered by the American Arbitration
Association under its Commercial Mediation Rules before resorting to
arbitration. Thereafter, any unresolved controversy or claim arising from or
relating to this Agreement or breach thereof shall be settled by binding
arbitration administered by the American Arbitration Association in accordance
with its Commercial Arbitration Rules and judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof
Notwithstanding any other provision of this Agreement or this Section 7.6 to the
contrary, no party shall be precluded from seeking injunctive relief or a
temporary restraining order prior to implementing procedures for mediation or
arbitration hereunder provided that such party determines in the good faith
exercise of its best judgment that it will suffer irreparable harm or injury by
any delay caused by mediation or arbitration proceedings.
7.7 Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
7.8 Entire Agreement. This Agreement, together with each of the
Exhibits hereto, constitutes the entire agreement among the parties hereto with
respect to the matters covered hereby and thereby and supersedes all prior
agreements and understandings among the parties.
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7.9 Consents and Approval. Unless otherwise permitted to the contrary
by the terms hereof, in the case of any consent or approval required or
contemplated hereby, no party hereto shall unreasonably withhold consent or
approval.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as of the date first above written.
▇▇▇▇▇ INTERNATIONAL, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President -- Administration
▇▇▇▇▇▇ INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President Administration
CONEMSCO, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
CE DISTRIBUTION SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
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