EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
ERC INDUSTRIES, INC.
(D/B/A/ WOOD GROUP PRESSURE CONTROL)
(THE "BUYER")
AND
INVERSIONES WESTERN C.A.,
(THE "SELLER")
WHICH IS OWNED BY
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(THE "GUARANTOR")
RELATING TO ALL OF THE
ISSUED AND OUTSTANDING CAPITAL STOCK OF
BOMPET, C.A.
(THE "COMPANY")
EFFECTIVE AS OF
JANUARY 1, 1998
TABLE OF CONTENTS
1. DEFINITIONS - 1 -
2. SALE AND TRANSFER OF SHARES; CLOSING - 1 -
2.1 SHARES - 1 -
2.2 PURCHASE PRICE - 1 -
2.3 CLOSING - 1 -
2.4 CLOSING OBLIGATIONS - 2 -
2.5 EARN OUT AMOUNT - 3 -
3. REPRESENTATIONS AND WARRANTIES OF SELLER - 6 -
4. REPRESENTATIONS AND WARRANTIES OF BUYER - 6 -
5. GENERAL PROVISIONS - 6 -
5.1 EXPENSES - 6 -
5.2 PUBLIC ANNOUNCEMENTS - 7 -
5.3 CONFIDENTIALITY - 7 -
5.4 NOTICES - 7 -
5.5 ARBITRATION; - 9 -
5.6 FURTHER ASSURANCES - 10 -
5.7 WAIVER - 10 -
5.8 ENTIRE AGREEMENT AND MODIFICATION - 10 -
5.9 DISCLOSURE SCHEDULE - 11 -
5.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS - 11 -
5.11 SEVERABILITY - 11 -
5.12 SECTION HEADINGS, CONSTRUCTION - 11 -
5.13 TIME OF ESSENCE - 11 -
5.14 GOVERNING LAW - 12 -
5.15 COUNTERPARTS - 12 -
5.16 INCORPORATION BY REFERENCE - 12 -
5.17 NON-COMPETITION - 12 -
5.18 NON-USE OF NAME "BOMPET" - 13 -
5.19 GUARANTOR - 13 -
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("AGREEMENT") is made effective as of January 1,
1998, by ERC Industries, Inc., a Delaware corporation doing business as Wood
Group Pressure Control ("BUYER") and Inversiones Western, C.A., a Venezuelan
company (the "SELLER"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, an individual resident in
Venezuela ("GUARANTOR"). Seller owns Bompet, C.A., a company organized in
Venezuela pursuant to the laws of Venezuela (the "COMPANY").
RECITALS:
Seller desires to sell, and Buyer desires to purchase, all of the issued and
outstanding shares of capital stock (the "SHARES") of the Company for the
consideration and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the terms listed in SCHEDULE 1 have the meanings
specified or referred to in SCHEDULE 1.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement and in reliance on the
representations, warranties and indemnities provided in the schedules to this
Agreement, at the Closing, Seller will sell and transfer the Shares to Buyer,
and Buyer will purchase the Shares from Seller in exchange for the Purchase
Price.
2.2 PURCHASE PRICE
The purchase price (the "PURCHASE PRICE") for the Shares will be US$2,600,000
plus the Earn Out Amount and Earn Out Bonus.
2.3 CLOSING
The purchase and sale (the "CLOSING") provided for in this Agreement will take
place at the offices of Buyer's counsel at ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ y
Asociados, Edificio
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2000, Calle 74 entre Avenidas 3H y 3Y at 1:00 p.m. (Maracaibo, Zulia time) on
January 30, 1998.
2.4 CLOSING OBLIGATIONS
a. At the Closing, Seller will deliver to Buyer:
(i) stock registry books representing the Shares, duly transferred
to Buyer;
(ii) a release in the form of EXHIBIT 2.4(A)(II) executed by Seller
(the "SELLER'S RELEASE");
(iii) a certificate executed by Seller representing and warranting to
Buyer that each of Seller's representations and warranties in
this Agreement is accurate in all respects as of the Closing
Date and that all of the covenants and obligations that Seller
is required to perform or to comply with pursuant to this
Agreement at or prior to the Closing (considered collectively),
and each of the covenants and obligations (considered
individually), have been duly performed and complied with in
all material respects;
(iv) an opinion of the Seller's legal counsel dated the Closing
Date, in the form of EXHIBIT 2.4(A)(IV);
(v) the Indemnity Agreement in the form of EXHIBIT 2.4(A)(V);
(vi) the Lease Agreement in the form of EXHIBIT 2.4(A)(VI),
(vii) such other documents as Buyer or its legal counsel may
reasonably request for the purpose of (i) evidencing the
accuracy of any of Seller's representations and warranties,
(ii) evidencing the performance by Seller or the Company of, or
the compliance by Seller or the Company with, any covenant or
obligation required to be performed or complied with by Seller
or the Company, (iii) evidencing the satisfaction of any
condition referred to in this Section 2.4, or (iv) otherwise
facilitating the consummation or performance of any of the
Contemplated Transactions.
b. At the Closing, Buyer will deliver to the Seller (as
appropriate):
(i) the amount of U.S.$2,600,000 by two (2) wire transfers: One
wire for 95% ($2.470.000) will be transferred to a Venezuelan
bank
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account specified by the Seller and another wire transfer for
5% ($130.000) will be transferred to Buyer's lawyer's account.
Buyer's lawyer will insure that this 5% amount is remitted to
satisfy the required Venezuelan withholding tax requirements
and will deliver to Seller a copy of the withholding
certificate or withholding form within ten (10) days after such
filing and remittance has been timely made;
(ii) a certificate executed by Buyer to the effect that, except as
otherwise stated in such certificate, each of Buyer's
representations and warranties in this Agreement is accurate in
all respects as of the Closing Date, and all of the covenants
and obligations that Buyer is required to perform or to comply
with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of the covenants and
obligations (considered individually), have been performed and
complied with in all material respects;
(iii) the Indemnity Agreement in the form of EXHIBIT 2.4(A)(V),
(iv) the Lease Agreement in the form of EXHIBIT 2.4(A)(VI), and
(v) such other documents as Seller and its legal counsel may
reasonably request for the purpose of (i) evidencing the
accuracy of any of Buyer's representations and warranties, (ii)
evidencing the performance by Buyer of, or the compliance by
Buyer with, any covenant or obligation required to be performed
or complied with by Buyer, (iii) evidencing the satisfaction of
any condition referred to in this Section 2.4, or (iv)
otherwise facilitating the consummation or performance of any
of the Contemplated Transactions.
2.5 EARN OUT AMOUNT
a. The Buyer agrees to pay to the Seller an additional amount
equal to the "EARN OUT AMOUNT" determined pursuant to and in
accordance with this Section 2.5. The total maximum Earn Out
Amount will be an aggregate amount equal to U.S.$3,000,000. The
maximum Earn Out Amount does not include the "EARN OUT BONUS".
b. The Earn Out Amount will be paid by the Buyer to the Seller on
or before 120 days following each of December 31, 1998,
December 31, 1999 and/or December 31, 2000. If the maximum Earn
Out Amount is earned prior to the end of any of such yearly
periods, the maximum Earn Out Amount will be paid in full at
the date that it has been earned in full.
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c. The Earn Out Amount will be determined based on the following
formula: (i) the audited net income after income tax of the
Company for each of the calendar years 1998, 1999, and 2000,
minus (ii) U.S.$1,250,000 for each calendar year 1998, 1999,
and 2000. If the income tax in any or all of calendar years
1998, 1999 or 2000 exceeds 25% of net income before tax, then
the income tax rate will be reduced to 25% of income before tax
for any income that is taxed at a rate that is greater than
25%. If the audited income tax rate is less than 25%, then the
lower audited number will be used. (Accordingly, for purposes
of calculating the Earn Out Amount the income tax rate that
will be applied to the Company's taxable income will be the
lesser of 25% or the actual audited income tax rate that is
applied to the Company's taxable income for 1998, 1999 and
2000). If the audited net income for a year is a loss, the loss
will not be carried over to a subsequent year. For example and
illustration purposes only, the following chart shows the Earn
Out Amount that would be payable if the assumptions in the
illustration were achieved by the Company:
Calendar Year Calendar Year Calendar Year
1998 1999 2000
--------------------------------------------------------------------------------
Audited Net US$2,000,000 US$1,250,000 US$3,250,000
Income of
Company for the
Calendar Year
--------------------------------------------------------------------------------
Annual $1,250,000 US$1,250,000 US$1,250,000 US$1,250,000
base amount
--------------------------------------------------------------------------------
Annual Amount US$750,000 - 0 - US$2,000,000
Payable
--------------------------------------------------------------------------------
Cumulative US$750,000 US$750,000 US$2,750,000
Payment
--------------------------------------------------------------------------------
d. The Company's auditors will deliver to the Seller on or before
120 days after December 31, 1998, December 31, 1999, and
December 31, 2000, a certificate certifying to (i) the
Company's net income for each applicable calendar year taken
into account for purposes of making the Earn Out Amount
calculation and (ii) the amount of the Earn Out Amount for that
year and the amount of the Earn Out Amount paid for any
preceding years. The Company's auditors shall be an
internationally recognized accounting firm. During the periods
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that the Earn Out Amount is to be calculated hereunder, the
Company will deliver unaudited financial statements for each
quarter within 30 days after the end of each quarter and
deliver a copy of the Company's audited financial statements
within 30 days after such audited financial statements are
delivered to the Company by the Company's auditors. A
representative of the Seller shall have the right to meet with
the general manager of the Company to discuss the Company's
business plan and strategy at least 3 times per year during the
Earn Out period and shall have the right to deliver written
comments to the general manager and the general manager's
superior describing what the Seller believes to be reasonable
and unreasonable expenses of the Company that impact the Earn
Out Amount.
e. The Company's net income shall be determined in accordance with
United States generally accepted accounting principles with
U.S. dollars as the functional currency and consistent with the
accounting policies and procedures of the Company. The
Company's audited net income for purposes of the Earn Out
calculation will be based on the Company's sales, service,
repair, and remanufacture of wellhead equipment and related
gate valves. Any extraordinary expense transfer from Buyer to
the Company must be first approved by the General Manager of
the Company to assure that proper value has been received by
the Company, otherwise such extraordinary expense transfer and
any resulting benefit arising therefrom will not be taken into
account for purposes of the calculation of the Earn Out Amount.
f. In addition to the Earn Out Amount provided in this Section
2.5, an Earn Out Bonus will be paid to the Seller in an amount
not to exceed U.S.$400,000. The Earn Out Bonus will equal 10%
multiplied by (i) the cumulative Earn Out Amount before the
U.S.$3,000,000 maximum Earn Out Amount, minus (ii) the
U.S.$3,000,000 maximum Earn Out Amount. The Earn Out Bonus will
be paid at the same time as the final Earn Out payment is due
and payable.
g. In the event that the Buyer no longer controls the Company as a
result of a merger of the Company with or into a competitor of
the Company in the wellhead equipment and related gate valve
business that has operations in Venezuela, then the maximum
Earn Out Amount will be deemed earned by the Seller and the
balance of the Earn Out Amount shall be deemed due and payable
immediately upon the occurrence of such event. In the event the
Buyer merges
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the Company with or into a company that is not a competitor of
the Company in the wellhead equipment and related gate valve
business that has operations in Venezuela, then the Buyer shall
remain liable for the Earn Out Amount. If the Buyer merges the
Company with another company and the Buyer loses control of the
Company, the Buyer will cause the controlling shareholder to
assume the liability for the Earn Out Amount in Section 2.5 and
the Buyer will remain liable for the Earn Out Amount. If the
Buyer sells the Company, the Buyer will cause the purchaser to
assume the liability for the Earn Out Amount and the Buyer will
remain liable for the Earn Out Amount. If the Buyer is to be
liquidated as a result of the insolvency of the Buyer, then the
maximum Earn Out Amount will be deemed earned by the Seller and
the balance of the Earn Out Amount shall be deemed due and
payable immediately upon the occurrence of such event. If the
Company becomes insolvent and Buyer elects to discontinue the
business of the Company, Seller will have a right of first
refusal to purchase the Company at the price and on the terms
that any third party offers for the Company.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that the statements contained in
SCHEDULE 3 are true, correct and complete as of the Closing Date, except as set
forth in the Disclosure Schedules accompanying this Agreement. The Disclosure
Schedules will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in SCHEDULE 3.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that the statements contained in
SCHEDULE 4 are true, correct and complete as of the Closing Date.
5. GENERAL PROVISIONS
5.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to this
Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, Representatives,
counsel, and accountants. Seller will cause the Company not to incur any out-
of-pocket expenses in connection with this Agreement. In the event of
termination of this Agreement, the obligation of each party
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to pay its own expenses will be subject to any rights of such party arising from
a breach of this Agreement by another party.
5.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this Agreement or
the Contemplated Transactions will be issued at such time and in such manner as
Buyer and Seller mutually determine, provided either party shall be entitled to
make such public announcements as it is required to make in order to comply with
Legal Requirements. Unless consented to by Buyer in advance or required by
Legal Requirements, prior to the Closing, Seller shall, and shall cause the
Company to, keep this Agreement strictly confidential and may not make any
disclosure of this Agreement to any Person. Seller and Buyer will consult with
each other concerning the means by which the Company's employees, customers, and
suppliers and others having dealings with the Company will be informed of the
Contemplated Transactions, and Buyer will have the right to be present for any
such communication.
5.3 CONFIDENTIALITY
Subsequent to the Closing of the Contemplated Transactions, Seller and Guarantor
will maintain in confidence, and will use its or their best efforts to cause the
former and existing directors, former and existing officers, former and existing
employees, agents, and advisors of the Company to maintain in confidence, and
not use to the detriment of the Company or the Buyer any written, oral, or other
information obtained in confidence from the Buyer or the Company in connection
with this Agreement, the Contemplated Transactions or the business and affairs
of the Company, unless (a) such information is already publicly known to others
not bound by a duty of confidentiality or such information becomes publicly
available through no fault of Seller or Guarantor, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions and such disclosure is made known in writing to Buyer, or (c) the
furnishing or use of such information is required by or necessary or appropriate
in connection with legal proceedings and such furnishing or use is made known in
writing to Buyer.
5.4 NOTICES
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by an
internationally recognized overnight delivery service (receipt requested), or
(c) when received by the addressee, if sent by a internationally recognized
overnight delivery service (receipt requested), in each case to the appropriate
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addresses and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
If to the Seller or Guarantor:
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
INVERSIONES WESTERN, C.A.
Avenida Intercomunal Las Morochas
Campo Western
Ciudad ▇▇▇▇▇, Estado ▇▇▇▇
Venezuela
Facsimile No.:011-58-65-319736
with a copy to:
Aveledo, Klemprer, ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇▇ Delta, Piso 11
Av. ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
Altamira Sur, Caracas
Venezuela
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇-▇▇▇▇▇▇▇▇
If to Buyer:
ERC Industries, Inc.
Wood Group Pressure Control
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile No.: 281.398.8086
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: 713.236.5551
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5.5 ARBITRATION; JURISDICTION; SERVICE OF PROCESS
a. In the event that there shall be any dispute arising out of or in any
way relating to this Agreement, the Contemplated Transaction, any document
referred to or incorporated herein by reference or centrally related to the
subject matter hereof, or the subject matter of any of the same, the parties
covenant and agree as follows:
1. The parties shall first use their reasonable Best Efforts to resolve
such dispute among themselves, with or without mediation.
2. If the parties are unable to resolve such dispute among themselves,
such dispute shall be submitted to binding arbitration in New York,
New York, U.S.A., under the auspices of, and pursuant to the rules of,
the International Chamber of Commerce Rules of Arbitration as then in
effect, or such other procedures as the parties may agree to at the
time, before a tribunal of three arbitrators, one of which shall be
selected by Seller, one of which shall be selected by Buyer, and the
third of which shall be selected by the two arbitrators so selected.
Any award issued as a result of such arbitration shall be final and
binding between the parties, and shall be enforceable by any court
having jurisdiction over the party against whom enforcement is sought.
A ruling by the arbitrators shall be non-appealable. The parties agree
to abide by and perform any award rendered by the arbitrators. If
either Seller or Buyer seeks enforcement of the terms of this
Agreement or seeks enforcement of any award rendered by the
arbitrators, then the prevailing party (designated by the arbitrators)
to such proceeding(s) shall be entitled to recover its costs and
expenses from the non-prevailing party, in addition to any other
relief to which it may be entitled. If a dispute arises and one party
fails or refuses to designate an arbitrator within 30 days after
receipt of a written notice that an arbitration proceeding is to be
held, then the dispute shall be resolved solely by the arbitrator
designated by the other party and such arbitration award shall be as
binding as if 3 arbitrators had participated in the arbitration
proceeding. Either Seller or Buyer may cause an arbitration proceeding
to commence by giving the other party notice in writing of such
arbitration. Seller and Buyer covenant and agree to act as
expeditiously as practicable in order to resolve all disputes by
arbitration. Notwithstanding anything in this section to the contrary,
neither Seller nor Buyer shall be precluded from seeking court action
in the event the action sought is either injunctive action, a
restraining order or other equitable relief. The arbitration
proceeding shall be held in English.
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b. Process in any action or proceeding referred to in the preceding
section may be served on any party anywhere in the world.
c. Except as expressly provided herein and except for injunctions and
other equitable remedies that are required in order to enforce this Agreement,
no action may be brought in any court of law and each of the parties waives any
rights that it may have to bring a cause of action in any court or in any
proceeding involving a jury to the maximum extent permitted by law.
5.6 FURTHER ASSURANCES
The parties agree to (a) furnish upon request to each other such further
information, (b) execute and deliver to each other such other documents, and (c)
do such other acts and things, all as the other party may reasonably request,
for the purpose of carrying out the intent of this Agreement and the documents
referred to in this Agreement.
5.7 WAIVER
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
5.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with respect
to its subject matter (including the Letter of Intent between Buyer and Seller
dated September 26, 1997), and constitutes (along with the documents and
agreements referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by the party to be charged with the amendment.
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5.9 DISCLOSURE SCHEDULE
The disclosures in the Disclosure Schedule will relate only to the
representations and warranties in the Section of SCHEDULE 3 to which they
expressly relate and not to any other representation or warranty in SCHEDULE 3.
5.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties, except that Buyer or Seller may assign any
of its rights under this Agreement to any of their respective Subsidiaries or
Affiliates. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
5.11 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
5.12 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement or any Schedules or any other
agreements or documents referred to in this Agreement are provided for
convenience of reference only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement or the Schedule, as
appropriate. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
5.13 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
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5.14 GOVERNING LAW
This Agreement will be governed by the laws of the Republic of Venezuela without
regard to conflict of laws principles.
5.15 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
5.16 INCORPORATION BY REFERENCE
The Exhibits and Schedules identified in this Agreement or in any Exhibit or
Schedule referred to in this Agreement are incorporated in this Agreement by
reference and made a part hereof for all purposes as if fully set forth in this
Agreement.
5.17 NON-COMPETITION
As an inducement for Buyer to enter into this Agreement, Seller agrees that:
(a) For a period of three (3) years after the Closing:
(i) Seller and its Affiliates will not, directly or indirectly, engage or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be employed by,
associated with, or in any manner connected with, lend Seller's name or any
similar name to, lend Seller's credit to, or render services or advice to the
business described in Section 2.5(e), anywhere within Venezuela. Seller agrees
that this covenant is reasonable with respect to its duration, geographical
area, and scope.
(ii) Seller and its Affiliates will not, directly or indirectly, either for
himself or any other Person, (A) induce or attempt to induce any employee of
Company to leave the employ of the Company, (B) in any way interfere with the
relationship between the Company and any employee of the Company, (C) employ, or
otherwise engage as an employee, independent contractor, or otherwise, any
employee of the Company, or (D) induce or attempt to induce any customer,
supplier, licensee, or business relation of the Company to cease doing business
with the Company, or in any way interfere with the relationship between any
customer, supplier, licensee, or business relation of the Company. Buyer and
its Affiliates will not, directly or indirectly, (x) induce or attempt to induce
any employee of Seller to leave the employ of Seller, or (y) in any way
interfere with the relationship between the Seller and any employee of the
Seller;
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(iii) Seller and its Affiliates will not, directly or indirectly, either for
himself or any other Person, solicit the business of any Person known to Seller
to be a customer of the Company, whether or not Seller had personal contact with
such Person, with respect to products or activities which compete in whole or in
part with the products or activities of the Company;
(b) In the event of a breach by Seller or any of his or its Affiliates of any
covenant set forth in this Section, the term of such covenant will be extended
by the period of the duration of such breach;
(c) Seller and its Affiliates will not, at any time during or after the three
year period, disparage Buyer or the Company, or any of their shareholders,
directors, officers, employees, or agents and Buyer will not disparage the
Seller or its Affiliates or any of their shareholders, directors, officers,
employees, or agents at any time during or after the three year period; and
(d) Guarantor will, for a period of three (3) years after the Closing, within
ten days after accepting any employment, advise Buyer of the identity of any
employer of Seller. Buyer or the Company may serve notice upon each such
employer that Seller is bound by this Agreement and furnish each such employer
with a copy of this Agreement or relevant portions thereof.
5.18 NON-USE OF NAME "BOMPET"
Upon ten (10) days written notice from the Buyer or the Company to the Seller
and/or any of its Affiliates, Seller will cause any Affiliates or Subsidiaries
of the Seller to change its or their corporate or assumed name(s) to a name that
does not use the word "Bompet" and to cease using such name for all purposes.
The name "Bompet" is the sole property of the Company and the Seller and its
Affiliates shall not make any use of such name in contravention of the rights or
direction of the Company. Any such change of name will be done at the cost and
expense of the Seller. At any time from and after the date of the Closing, the
Seller will cause Bompet de Venezuela to transfer, convey, assign and deliver or
to cause to be transferred, conveyed, assigned and delivered, any and all
registrations or licenses to the Company that relate to the business of the
Company. If such registrations or licenses are not transferable then the
Sellers will assist the Company in obtaining such registrations or licenses.
5.19 GUARANTOR
Guarantor unconditionally guarantees all of the obligations and responsibilities
of the Seller under this Agreement (including, but not limited to, all
covenants, representations and warranties of the Seller in any schedules or
exhibits attached hereto or incorporated herein by reference) and all other
agreements, instruments and documents that are
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executed and delivered in connection with or as a part of the transaction
contemplated by this Agreement as fully as if the Guarantor were the Seller and
to the maximum extent permitted under Venezuelan law.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
BUYER: SELLER:
ERC INDUSTRIES, INC. INVERSIONES WESTERN, C.A.
d/b/a Wood Group Pressure Control
By: /s/ D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------- -------------------------------
D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
GUARANTOR:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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