EXHIBIT 2
AMENDED AND RESTATED
PURCHASE AND SALE AGREEMENT
by and among
NATIONAL-OILWELL, L.P.
a Delaware limited partnership
BOOTS & ▇▇▇▇▇ INTERNATIONAL WELL CONTROL, INC.
a Delaware corporation
and
ELMAGCO, INC.
d/b/a BAYLOR COMPANY
a Delaware corporation
TABLE OF CONTENTS
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ARTICLE 1. PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . 11
1.1 Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
1.2 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . .12
ARTICLE 2. PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . .12
2.1 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . .12
2.2 Closing Payment. . . . . . . . . . . . . . . . . . . . . . . . .12
ARTICLE 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . .13
3.1 Representations and Warranties of Seller. . . . . . . . . . .13
3.2 Representations and Warranties of Buyer . . . . . . . . . . .19
3.3. Waiver of Implied Warranties . . . . . . . . . . . . . . . . .19
ARTICLE 4. DUE DILIGENCE . . . . . . . . . . . . . . . . . . . . . . . . . . .20
4.1 Access to Assets . . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Access to Records . . . . . . . . . . . . . . . . . . . . . . .21
4.3 Access to Persons. . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Other Due Diligence . . . . . . . . . . . . . . . . . . . . . .21
4.5 Supplemental Disclosures . . . . . . . . . . . . . . . . . . . .21
4.6 Inaccuracies of Representations and Warranties . . . . . . . 21
ARTICLE 5. OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
5.1 Permits; Environmental Requirements . . . . . . . . . . . . . .22
ARTICLE 6. PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Certain Covenants of Seller Pending Closing . . . . . . . . 22
ARTICLE 7. TAXES; PRORATIONS . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Payment of Ad Valorem and Property Taxes . . . . . . . . . 23
7.2 Sales, Use and Transfer Taxes . . . . . . . . . . . . . . . .23
ARTICLE 8. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.1 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.2 Events at Closing . . . . . . . . . . . . . . . . . . . . . . .24
8.3 Effect of Closing . . . . . . . . . . . . . . . . . . . . . . .25
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ARTICLE 9. POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . .25
9.1. Final Settlement Statement . . . . . . . . . . . . . . . . . . 25
9.2. Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . .26
9.3. Books and Records. . . . . . . . . . . . . . . . . . . . . . . 26
9.4 Public Announcements. . . . . . . . . . . . . . . . . . . . . . 27
9.5 Restrictions on Sale of Assets . . . . . . . . . . . . . . . 27
9.6 Non-Competition. . . . . . . . . . . . . . . . . . . . . . . . . 27
9.7 Pending and Threatened Litigation. . . . . . . . . . . . . . .28
9.8 Cooperation Regarding Permits . . . . . . . . . . . . . . . . .28
9.9. Warranty Work. . . . . . . . . . . . . . . . . . . . . . . . . .28
9.10 Seller Employee Plans. . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 10. INDEMNIFICATION; SURVIVAL . . . . . . . . . . . . . . . . . . . .29
10.1 Certain Agreements and Acknowledgements . . . . . . . . . . . 29
10.2 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . .30
10.4 Limitation on Liability. . . . . . . . . . . . . . . . . . . . 30
10.5 Survival of Representations and Warranties . . . . . . . . . 31
10.6 Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 11. EMPLOYMENT MATTERS . . . . . . . . . . . . . . . . . . . . . . . 31
11.1 Offers of Employment . . . . . . . . . . . . . . . . . . . . . 31
11.2 Terms of Employment . . . . . . . . . . . . . . . . . . . . . .32
11.3 No Third Party Rights . . . . . . . . . . . . . . . . . . . . 32
11.4 Employee Notifications . . . . . . . . . . . . . . . . . . . . .33
11.5 Former Employees; Transferred Employees . . . . . . . . . . . 33
ARTICLE 12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . .33
12.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
12.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.3 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 34
12.4 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
12.5 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . .34
12.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . .34
12.7 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 35
12.8 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.9 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.10 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.11 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . .35
12.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.13 Consent to Jurisdiction and Forum Selection . . . . . . . . 35
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12.14 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . .35
12.15 Punitive Damages. . . . . . . . . . . . . . . . . . . . . . . . 36
12.16 No Admissions . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.17 No Third Party Beneficiaries . . . . . . . . . . . . . . . . .36
12.18 No Required Notice . . . . . . . . . . . . . . . . . . . . . . 36
12.19 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
EXHIBITS
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A - ▇▇▇▇ of Sale
B - Form of Special Warranty Deed
C - Form of Trademark Assignment
D - Form of Patent Assignment
SCHEDULES
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1.1.8 - Intellectual Property
1.2 - Certain Excluded Assets
1.2.7 - Excluded Contracts
2.1 - Retained Assumed Liabilities
3.1.3 - Violations
3.1.4 - Actions and Proceedings
3.1.5 - Brokers
3.1.6(A) - Material Contracts
3.1.6(B) - Defaults
3.1.6(C) - Consents and Approvals
3.1.8 - Permits
3.1.9 - Compliance with Laws
3.1.10 - Labor and Employment Matters
3.1.11 - Non-Assignable Licenses
3.1.12 - No Material Adverse Effect/Change
3.1.13 - Taxes
3.1.14 - Financial Statements
3.1.17 - Seller Benefit Plans
3.1.18 - Title to Assets
11.1 - Employee Listing
12.7.2 - Confidential Agreements
12.7.3 - Confidential Information
12.19(A) - Seller Knowledge List
12.19(B) - Buyer Knowledge List
iii
AMENDED AND RESTATED
PURCHASE AND SALE AGREEMENT
This AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT (this "Agreement") is
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made as of the ____ day of September, 2000, by and among Elmagco, Inc. d/b/a
Baylor Company, a Delaware corporation ("Seller"), Boots & ▇▇▇▇▇ International
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Well Control, Inc. a Delaware corporation (together with Seller, the "Seller
Parties") and National Oilwell L.P., a Delaware limited partnership ("Buyer").
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RECITALS
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WHEREAS, Seller and Buyer entered into a Purchase and Sale Agreement
dated the 15th day of September, 2000 (the "Original Agreement");
WHEREAS, Seller and Buyer have further agreed to enter into this
Agreement in order to set forth their mutual understandings and modifications to
the Original Agreement;
WHEREAS, Seller is engaged in the Business (as defined below); and
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller all of the Business and the assets used in connection with the
Business, all on the terms and conditions herein contained.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
DEFINITIONS
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All terms used herein (i) if of a particular gender shall be construed
to cover every other gender and (ii) shall include both the singular and plural
of such term. The words "herein," "hereunder," "herewith" and "hereof" shall
refer to this Agreement, unless the context otherwise requires. All references
to articles, sections, subsections, subparagraphs, schedules and exhibits are to
the articles, sections, subsections, subparagraphs, schedules and exhibits of
this Agreement, unless the context otherwise requires. The following terms have
the following meanings when used with an initial capital letter in this
Agreement:
"Assets" shall have the meaning set forth in Section 1.1, but does not
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mean or include any of the Excluded Assets.
"Assumed Contracts" means the contracts and agreements primarily
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related to the Business, including the Material Contracts and any prepaid
insurance policies covering the Business, but does not include any of the
Excluded Contracts.
iv
"Assumed Liabilities" means all liabilities and obligations of Seller
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directly relating to the Business or the Assets that are (i) incurred in the
ordinary course of the Business and due to be performed or paid after the
Closing Date; (ii) included in those set forth on the Final Settlement
Statement; (iii) of the type reflected on the June 30, 2000 balance sheet
included within the Financial Statements and incurred since the date thereof in
the ordinary course of the Business on or before the Closing Date; (iii)
Permitted Encumbrances; and (iv) liabilities and obligations which Buyer has
expressly assumed or agreed to be responsible for pursuant to this Agreement or
the documents delivered in connection herewith. Notwithstanding anything herein
to the contrary, Assumed Liabilities shall not include (a) any liability
incurred by Seller after the date hereof and prior to the Closing which Seller
covenants herein not to incur after the date hereof; (b) any liabilities that
arise out of or primarily relate to the Excluded Assets; (c) any liabilities
that arise out of or primarily relate to a breach or default under any Assumed
Contract (or any action that, solely with the giving of notice or lapse of any
applicable cure period, or both, would constitute a default or breach
thereunder) occurring prior to the Closing Date; (d) any liabilities or
obligations expressly assumed or retained by Seller or for which Seller has
agreed to be responsible pursuant to this Agreement or the documents delivered
in connection herewith, including without limitation, Pre-Closing Environmental
Liabilities; (e) any liabilities or obligations for the operations of the
Business prior to June 30, 2000 not properly accrued for or disclosed on the
June 30, 2000 balance sheet of the Financial Statements.
"Baylor Companies" means collectively, Seller and it's wholly owned
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subsidiaries: Baylor Company Ltd., a company organized under the laws of the
United Kingdom, Baylor Electronics, Inc., a Texas corporation; Baylor Company, a
Texas corporation; and Baylor Controls, Inc., a Texas corporation.
"▇▇▇▇ of Sale" means an "AS IS WHERE IS" ▇▇▇▇ of sale, assignment and
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assumption agreement with respect to the personal property and inventory
constituting a portion of the Assets in the form of Exhibit A attached hereto.
"Business" means the business activities of the Baylor Companies,
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their affiliates and subsidiaries as of the date of this Agreement, including
without limitation, the manufacture of power generation and electronic control
systems for the oil and gas industry and electromagnetic braking systems for
drilling rigs.
"Claims" means past, present or future liabilities, including without
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limitation, Environmental Liabilities, product warranties, losses, damages
(including incidental, consequential, special and punitive damages), penalties,
fines, obligations, judgments, liens, costs and expenses (including, without
limitation, costs of investigation, attorneys' fees, experts' fees, consultants'
fees and disbursements of any kind or of any nature whatsoever), claims,
actions, causes of action, demands, filings, settlements, investigations,
proceedings, arbitration, mediations, suits or other legal or administrative
proceedings, whether civil or criminal or based on negligence, trespass,
intentional tort, strict liability, contribution or indemnification, common or
decisional law or otherwise, and whether any of the foregoing is the result of a
third-party claim, a claim by Buyer or Seller, or otherwise.
"Closing," means the consummation of the transaction contemplated
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hereby, all of which shall occur concurrently.
"Closing Date" means the earliest practicable date after all
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conditions to Closing have been satisfied, but not later than September 30,
2000.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Confidentiality Agreement" means the Agreement for Use and
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Nondisclosure of Confidential and/or Proprietary Information between Buyer and
Seller dated July 19, 2000.
"Controlled Group" means a "controlled group" of organizations (as
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defined in Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended).
"Employees" means those employees employed by Seller whose primary
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responsibilities are directly related to the conduct of the Business or whose
services are necessary for the conduct of the Business.
"Environmental Liabilities" means past, present or future liabilities,
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losses, damages (including incidental, consequential, special and punitive
damages), penalties, fines, obligations, judgments, liens, costs and expenses
(including without limitation costs of investigation, attorneys' fees, experts'
fees, consultants' fees and disbursements of any kind or of any nature
whatsoever) claims, actions, causes of action, demands, filings, settlements,
investigations, proceedings, arbitrations, mediations, suits or other legal or
administrative proceedings, whether civil or criminal, or based on negligence,
trespass, intentional tort, strict liability, contribution or indemnification,
common or decisional law or otherwise, and whether any of the foregoing is a
result of a third-party claim, a claim by Buyer or Seller, or otherwise, for or
in connection with, or arising in any way from any violation of, or any
obligation, duty or responsibility under:
(i) any Environmental Requirement.
(ii) any Environmental Permit listed in Schedule 3.1.8.
Environmental Liabilities shall not include occupational safety and
health matters. Environmental Liabilities as defined and used herein only
pertain to the Environmental Liabilities of the Assets and Business,
including former activities.
"Environmental Material" means any substance, product, waste or other
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material of any nature whatsoever (a) that is or becomes identified, listed,
published, or defined as a hazardous substance, hazardous waste, dangerous
waste, hazardous material, toxic substance, solid waste (as defined by the Texas
Natural Resources Conservation Commission), acutely hazardous waste, extremely
hazardous waste, infectious waste, volatile organic compound, waste, air
contaminant, air pollutant, or pollutant, under any Environmental Requirement
and (b) that is regulated, restricted or addressed under or pursuant to or may
give rise to liability under any Environmental Requirement. Notwithstanding
anything contained herein to the contrary, Environmental Material shall exclude
any material which has been the subject of remediation in, on or under the Real
Property pursuant to and in satisfaction of a jurisdictional Governmental
Authority program to the extent such jurisdictional authority declares in
writing that such remediation has been completed in satisfaction of applicable
laws, rules and regulations or that no further action or remediation is
required.
"Environmental Permit" means any permit, license, consent, certificate
--------------------
of financial responsibility or other authorization or approval of or by any
Government Authority under any applicable Environmental Requirement and any
application therefor or filing in connection therewith.
"Environmental Release" means any actual or threatened spilling,
----------------------
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, migrating, dumping or disposing of an Environmental Material into the
air, surface water, groundwater, soil, land surface or subsurface strata in
violation of any applicable Environmental Requirement(including the abandonment
or discarding of barrels, containers and other closed receptacles holding an
Environmental Material, in violation of any applicable Environmental
Requirement).
"Environmental Requirement" means any of the following requirements
--------------------------
only to the extent that apply to the Business (A) any international, national,
provincial, regional, Indian, federal, state, municipal or local, statute,
treaty, compact, law, rule, order, ordinance, Environmental Permit, regulation,
judgment, binding decision, decree, or common or decisional law (including
without limitation any applicable principles of negligence, trespass, nuisance,
intentional tort, strict liability, contribution or indemnification) or other
applicable requirement of any Government Authority which relates to or imposes
liabilities, duties or obligations in connection with the environment, natural
resources, wildlife or human health, including without limitation to the extent
applicable (i) the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Sections 9601 et seq.), (ii) the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act (42 U.S.C.
Sections 6901 et seq.), (iii) the Emergency Planning and Community Right to Know
Act (42 U.S.C. Sections 11001 et seq.), (iv) the Clean Air Act (42 U.S.C.
Sections 7401 et seq.), (v) the Clean Water Act (33 U.S.C. Sections 1251 et
seq.), (vi) the Toxic Substances Control Act (15 U.S.C. Sections 2601 et seq.),
(vii) the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Sections
136 et seq.), (viii) the Safe Drinking Water Act (42 U.S.C. Sections 300f et
seq.), (ix) the Residential Lead-Base Paint Hazard Reduction Act (42 U.S.C.
Sections 4851 et seq.), (x) the Oil Pollution and Compensation Act (33 U.S.C.
Sections 2761 et seq.), (xi) the Hazardous Materials Transportation Act (49
U.S.C. Sections 5401 et seq.), (xii) the Hazardous Liquid Pipeline Safety Act
(49 U.S.C. Sections 60101 et seq.), (xiii) any foreign, international,
provincial, regional, Indian, state, municipal or local statutes, treaties,
compacts, laws, rules, orders, ordinances or the like similar or analogous to
the federal statutes listed in the foregoing parts (i) to (xii), (xiv) any
amendments to the statutes, treaties, compacts, laws, rules, orders or
ordinances listed in the foregoing parts (i) to (xiii) regardless of whether in
existence on the date hereof, (xv) any rules, Environmental Permits, binding
decisions, decrees, regulations, directives, orders, judgments or the like
adopted pursuant to or implementing the statutes, laws, treaties, compacts,
rules, orders, ordinances and amendments listed in the foregoing parts (i) to
(xiv) and (xvi) any other law, statutes, treaty, compact, ordinance, amendment,
rule, regulation, Environmental Permit, directive, binding decision, decree,
judgment, order, common law requirement, or the like in effect now or in the
future relating to the environment, natural resources, wildlife or human health
matters, and (B) any private agreement, contract or undertaking of Seller or
Buyer to the extent such private agreement, contract or undertaking relates
directly or indirectly to, or imposes liabilities, duties or obligations in
connection with human health excluding occupational health, natural resources,
wildlife or the environment.
"Environmental Work" means any investigation, site monitoring, medical
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monitoring, containment, cleanup, removal, abatement, assessment, remediation,
response, closure, post-closure care, restoration or other work of any kind or
nature relating to the avoidance or mitigation of the adverse effects of
Environmental Materials on human health excluding occupational health, natural
resources, wildlife, or the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
"ERISA Affiliate" means any corporation, trade or business the
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employees of which, together with the employees of Seller, are required to be
treated as employed by a single employer under the provisions of ERISA or
Section 414 of the Code.
"Excluded Assets" shall have the meaning set forth in Section 1.2.
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"Excluded Contracts" means the contracts and agreements disclosed on
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Schedule 1.2.7.
"Final Settlement Statement" means a balance sheet as of the
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Closing Date prepared after the Closing on a basis consistent with the methods
used to prepare the Financial Statements, and a statement setting forth the
amount of, and the method of calculation of, the Purchase Price (including a
definitive calculation of the Net Worth Adjustment).
"Financial Statements" shall have the meaning set forth in Subsection
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3.1.14.
"GAAP" means generally accepted accounting principles consistently
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applied.
"Government Authority" means any international, national, provincial,
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regional, Indian, federal, state, municipal or local executive, legislative,
judicial, regulatory or administrative agency, department, commission, board,
bureau or other governmental or quasi-governmental authority or instrumentality.
"Indemnified Party" shall have the meaning given that term in Section
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10.3.
"Indemnifying Party" shall have the meaning given that term in Section
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10.3.
"Intellectual Property" , as set forth in Schedule 1.1.8, means (a)
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all inventions whether patentable or unpatentable (whether or not reduced to
practice), all improvements thereto, and all patents, patent applications and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, re-examinations and foreign
counterparts thereof; (b) all Marks, together with all translations,
adaptations, derivations and combinations thereof and all applications,
registrations, foreign counterparts and renewals in connection therewith; (c)
all copyrightable works, drawings and designs, all copyrights and all
applications, registrations and renewals in connection therewith; (d) trade
secrets and proprietary information; (e) all intellectual property rights in all
computer software (including data and related documentation); (f) all other
proprietary rights of a similar nature; and (g) all intellectual property rights
in all copies and tangible embodiments thereof (in whatever form or medium)
related primarily to the Business.
"Inventory" means the inventory of raw materials, ingredients,
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packaging, supplies, spare parts, consumable inventory and products, work in
progress and finished goods related primarily to the Business.
"Marks" means all logos, marks, trademarks, trademark registrations,
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trade names, product marks, service marks and other commercial symbols,
registered or unregistered, held or registered in the name of Seller on, or at
any time prior to, the Closing Date.
"Material Adverse Effect" means any change or effect that individually
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or in the aggregate is materially adverse to the Business as presently conducted
by Seller, taken as a whole, or the transactions contemplated by this Agreement,
taken as a whole.
"Material Contracts" shall have the meaning ascribed to that term in
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Subsection 3.1.6(A).
"Net Worth Adjustment" means the United States dollar amount (which
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may be either a positive or a negative number) equal to (a) net worth of the
Business as of the Closing Date minus (b) the net worth of the Business as
reflected on the June 30, 2000 balance sheet of the Financial Statements being
$31,338,471.00, which was calculated as $39,641,410.00 of Stockholders Equity
less $8,302,939.00 of due from Parent.
"Patents" means all United States registered patents and patent
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applications held or registered in the name of Seller on the Closing Date,
together with all reissuances, continuations, continuations-in-part, revisions,
extensions, reexaminations and foreign counterparts thereof.
"Permit" means any permit, license, franchise, consent, certificate of
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financial responsibility or other authorization or approval of or by any
Government Authority, and shall include without limitation any Environmental
Permit.
"Permitted Encumbrances" means
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(a) the matters disclosed on Schedule 3.1.18;
(b) rights reserved to, or vested in, or any obligations or duties to
any Government Authority;
(c) zoning, entitlement, building and other land use regulations
imposed by governmental agencies having jurisdiction over the
Real Property which are not violated by the current use and
operation of the Real Property;
(d) liens for current taxes or other governmental charges due or not
yet due and payable or the amount or validity of which is being
contested;
(e) mechanics, carriers, workers, repairers and similar liens arising
or incurred in the ordinary course of business of the Company,
including without limitation, liens arising pursuant to lease
agreements, for amounts which are not delinquent and which could
not, individually or in the aggregate, have a material adverse
effect upon the Company;
(f) those liens and encumbrances disclosed in the Financial
Statements and the notes thereto; and
(g) covenants, conditions, restrictions, easements and other matters
of record affecting title to the Real Property which do not
unreasonably interfere with the current use, occupancy, or value,
or the marketability of title, of such Real Property and as
properly filed of record.
"Person" means any individual, corporation, partnership, limited
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liability company, Government Authority or other entity.
"Pre-Closing Environmental Liabilities" means Environmental
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Liabilities relating to or resulting from acts or omissions occurring, or
conditions created or existing, or arising out of the Business or the Real
Property, prior to the Closing Date.
"Property Acquisition Agreements" means the agreements under, by or
---------------------------------
pursuant to which Seller acquired any or all of its interest in any of the
Assets including without limitation assignments, assignment agreements, exchange
agreements, purchase agreements and settlement agreements.
"Purchase Price" means an amount equal to TWENTY NINE MILLION AND
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NO/100 DOLLARS ($29,000,000.00) and the amount of the retained Assumed
Liabilities.
"Real Property" means, collectively, the approximately 25 acres, more
--------------
or less, located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, together
with all buildings, improvements and fixtures, including trade fixtures, located
thereon.
"Records" means originals of Seller's records primarily relating to
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the Assets or the Business, including property files, lease files, contract
files, environmental files, health and safety files, Permit files, abstracts and
title opinions, or policies, production records, customer data, pricing data,
tax records, insurance and related records, personnel records, transportation
records, manufacturing records, surveys and maps. Notwithstanding the preceding
sentence, "Records" does not include (i) documents and information subject to
any attorney-client privilege or work product privilege held by Seller and/or
its attorneys (unless the Record in question materially relates to the Assets or
to a liability which is an Assumed Liability), (ii) documents and information
relating to the negotiation of this Agreement or the transactions contemplated
hereby, (iii) documents and information which Seller may not disclose or provide
to Buyer due to a binding obligation to one or more other Persons, other than
members of the Seller, to treat such documents or information as confidential
(unless Buyer agrees to be bound by such obligations, in which event Seller
shall make a good faith effort to obtain permission to disclose such documents
or information to Buyer); (iv) documents and information relating primarily to
the Excluded Assets; or (v) personnel records which Seller is required by law to
maintain as confidential. To the extent Seller does not disclose under the
foregoing clause (iii), Seller shall provide a log of such documents and
information to Buyer.
"Seller Benefit Plan" means any Seller Fringe Benefit Plan, Seller
---------------------
Pension Plan or Seller Welfare Benefit Plan.
"Seller Fringe Benefit Plan" means any written plan or policy
-----------------------------
providing for "fringe benefits" maintained by Seller as of the date hereof in
connection with the Business (including but not limited to vacation, paid
holidays, personal leave, employee discount, educational benefit or similar
program), and any other deferred compensation, bonus, stock option, employee
stock purchase, severance, group insurance, disability, unemployment,
supplemental unemployment, layoff, consulting or stock, appreciation rights
plan, and any other similar written plan, policy, arrangement, commitment or
understanding other than Seller Pension Plans and Seller Welfare Benefit Plans.
"Seller Pension Plan" means any "employee pension benefit plan," as
---------------------
defined in Section 3(2) of ERISA, ever maintained or contributed to (or required
to be maintained or contributed to) by the Seller or any ERISA Affiliate that
cover Employees who are employed by Seller as of the date hereof.
"Seller Welfare Benefit Plan" means any "employee welfare benefit
------------------------------
plan," as defined in Section 3(l) of ERISA that the Seller or any ERISA
Affiliate maintains, contributes to or is required to maintain or contribute to
on behalf of any Employee who is employed by Seller as of the date hereof.
"State" means the State of Texas.
-----
"Supplemental Disclosure" means any written notice from Seller to
------------------------
Buyer required by Section 4.5.
"Transferred Employees" means Employees to whom Buyer has made an
----------------------
offer of employment pursuant to Section 11.1 and by whom such offer has been
accepted.
"Wiring Instructions" means the wiring instructions for the Closing
--------------------
Payment which Seller delivers to Buyer at least three business days prior to
Closing.
ARTICLE 1. PURCHASE AND SALE
1.1 Assets. Subject to the other terms and conditions hereof, Seller
------
agrees to sell transfer, convey, assign and deliver to Buyer and Buyer agrees to
purchase, accept and receive on and as of the Closing Date, subject to the terms
and provisions herein contained, all of Seller's right, title and interest in
and to, to the extent transferable, the properties, assets, interests and rights
(including contract rights) of every nature, kind and description, tangible and
intangible (including goodwill), whether real, personal or mixed, accrued,
contingent or otherwise and whether now existing or hereinafter acquired (other
than the Excluded Assets) primarily relating to or used or held for use in
connection with the Business (collectively, the "Assets"), including without
limitation:
1.1.1 the Real Property;
1.1.2 the Assumed Contracts;
1.1.3 all materials, supplies, spare parts, Inventory, furniture,
motor vehicles, rolling stock, tools, implements, appliances, machinery,
equipment, personal computers, improvements and other tangible personal property
and fixtures which relate primarily to the Assets;
1.1.4 the Records;
1.1.5 all Permits relating primarily to the Assets or the
Business;
1.1.6 all personal property leases for personal property relating
primarily to the Assets or the Business;
1.1.7 all assets included in the net worth of the Business as
reflected on the Final Settlement Statement;
1.1.8 all Intellectual Property described on Schedule 1.1.8,
including without limitation, the ownership of and all rights to use of the name
of Baylor;
1.1.9 all customer, prospect and marketing lists relating
primarily to the Business;
1.1.10. all of Elmagco, Inc.'s interests in any joint ventures,
partnerships or affiliated companies, including without limitation Seller's
ownership in ▇▇▇▇▇▇▇▇, Inc., a partnership with ▇▇▇▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ GmBH
& Co. KG;
1.1.11. all of the stock in Baylor Company, a Texas corporation.
1.2 Excluded Assets. Notwithstanding anything in this Agreement to the
---------------
contrary, the following properties, assets, rights and interests (collectively,
the "Excluded Assets") shall be excluded from the Assets to be sold and
transferred to Buyer hereunder:
1.2.1 all of Seller's right, title and interest in and to the
properties, assets, interests and rights (including contract rights) of every
nature, kind and description, tangible and intangible (including goodwill),
whether real, personal or mixed, accrued, contingent or otherwise not primarily
relating to or used or held for use in connection with the Business and those
properties, assets, rights and interests of Seller described on Schedule 1.2;
1.2.2 properties, assets, rights and interests sold or otherwise
disposed of by Seller in the ordinary course of the Business to the extent not
prohibited hereunder;
1.2.3 to the extent not prepaid, policies or contracts of
insurance and surety bonds and similar assurances of financial responsibility;
1.2.4 minutes, capital stock ledgers and similar corporate records
and instruments of Seller;
1.2.5 general ledgers and original books of entry subsidiary
thereto, tax returns, checks, vouchers and bank statements and supporting papers
of Seller for each of the foregoing;
1.2.6 all intercompany accounts between any of Elmagco, Inc
or the Baylor Companies and/or its Parent corporation;
1.2.7 the Excluded Contracts set forth on Schedule 1.2.7; and
1.2.8 the Seller Benefit Plans and all assets related thereto.
ARTICLE 2. PURCHASE PRICE
2.1 Consideration. In consideration for the transfer by Seller to
-------------
Buyer of the Assets, Buyer shall pay the Purchase Price to Seller at the time
and in the manner set forth herein. Notwithstanding the forgoing, to the extent
the Seller Parties elect to retain the obligation to satisfy and discharge any
of the Assumed Liabilities set forth on Schedule 2.1 hereto, the cash portion of
the Purchase Price shall be increased by the face amount of such retained
Assumed Liabilities.
2.2 Closing Payment. At the Closing, Buyer shall pay and deliver the
----------------
Purchase Price to Seller, by wire transfer of immediately available funds
denominated in United States Dollars in accordance with the Wiring Instructions.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller. Subject to the
--------------------------------------------
limitations and waivers set forth in Section 3.3 below, the Seller Parties
hereby represent and warrant to Buyer as follows:
3.1.1 Organization and Good Standing. Each of the Seller Parties
-------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite power and authority to own
and lease the properties and assets it owns and leases related to the Business
and to carry on the Business as such business is presently conducted. Seller is
duly licensed or qualified to do business in the State and all other
jurisdictions in which the character of the Assets or the nature of the Business
requires it to be so licensed or qualified except where a failure to have such
license or qualification would not have a material adverse effect upon the
operation of the Assets or the Business as presently conducted by Seller.
3.1.2 Corporate Authority; Authorization of Agreement. Each of
--------------------------------------------------
the Seller Parties has all corporate requisite power and authority to execute
and deliver this Agreement and the documents provided for herein to be executed
and delivered by Seller Parties at Closing, to consummate the transactions
contemplated hereby and to perform its obligations under this Agreement and such
documents. Seller Parties have taken all proper corporate action to authorize
and approve the execution and delivery of this Agreement and the documents
provided for herein to be executed and delivered by Seller Parties at Closing,
the performance of all the terms and conditions hereof and thereof to be
performed by Seller Parties and the consummation of the transactions
contemplated hereby and thereby. No other act or proceeding on the part of the
Seller Parties is necessary to authorize the execution, delivery or performance
of this Agreement or such other documents, or the transactions contemplated
hereby or thereby. This Agreement constitutes (and the documents provided for
herein to be executed and delivered by the Seller Parties at Closing will, when
executed and delivered, constitute) the legal, valid and binding obligations of
the Seller Parties, enforceable against the Seller Parties in accordance with
their terms, except as may be (i) limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law).
3.1.3 No Violation. Except as disclosed on Schedule 3.1.3, the
-------------
execution and delivery by Seller of this Agreement and the documents provided
for herein, the consummation by the Seller Parties of the transactions
contemplated hereby and thereby and the compliance by Seller with the terms
hereof and thereof, do not and will not, (i) violate, or conflict with or result
in a breach of any provisions of or constitute a default (or an event which,
with notice or lapse of any applicable cure period, or both, would constitute a
default) or require a consent under, or result in the termination of, or
accelerate the performance required by or result in the creation of any lien
upon any of the Assets under, any of the terms, conditions or provisions of the
articles of incorporation, bylaws, limited liability company operating agreement
or similar charter documents of the Seller Parties, or (ii) violate any order,
writ, injunction, decree, statute, rule or regulation of any Government
Authority applicable to the Seller Parties or the Assets.
3.1.4 Actions and Proceedings. Except as disclosed on Schedule 3.1.4:
------------------------
(A) there is no action, suit, proceeding or investigation
pending against Seller Parties which has been served on the Seller Parties,
or to the best of Seller Parties' knowledge, threatened against Seller
Parties involving or affecting the Business or any Assets material to the
Business and seeking (individually, or with respect to Claims which arise
out of the same facts and circumstances, in the aggregate), (i)
compensation in a specified amount in excess of $50,000; (ii) compensation
in an unspecified amount that could as of the date hereof reasonably be
expected to exceed $50,000; (iii) injunctive relief except for such
injunctive relief that if granted would not be material to the Business as
presently conducted by Seller or to any Assets material to the Business.
(B) there are no decrees, injunctions, liens or orders of any
Governmental Authority outstanding against Seller relating to or affecting
the Business or any Assets material to the Business that would have a
Material Adverse Effect upon the Business as presently conducted.
(C) there is no action, suit, proceeding or investigation
pending against Seller which has been served on Seller by which any Person
seeks to restrain, prohibit or enjoin the performance by Seller of the
transactions contemplated hereby.
(D) there is no action, suit or proceeding pending against
Seller which has been served on Seller or, to the knowledge of the Seller
Parties, which has been threatened against Seller, by which any Person
seeks to take by eminent domain or condemnation any material portion of any
of the Real Property.
3.1.5 Brokers. No person acting on behalf of Seller Parties has
-------
any valid claim against Buyer or the Assets for any brokers or finder's fee or
similar compensation in connection with the transactions contemplated hereby.
Seller Parties shall indemnify, defend and hold Buyer harmless from and against
any and all Claims by any person alleging a right to a broker or finder's fee
from or through Seller.
3.1.6 Material Contracts.
-------------------
(A) Schedule 3.1.6(A) contains a true and complete listing of
all Material Contracts. For the purposes hereof, "Material Contracts" means
the following contracts or agreements to which Seller is a party and that
relate primarily to the Assets or the Business; (i) any written contract or
agreement obligating Seller to make capital expenditures which as of the
date hereof are reasonably estimated by Seller to exceed $50,000 after the
date hereof; (ii) any contract or agreement obligating Seller to pay, or
entitling Seller to receive, an amount which as of the date hereof is
reasonably estimated by Seller to exceed either (a) $50,000 in any 12 month
period after the date hereof or (b) $50,000 in the aggregate over the
remainder of current term of the contract or agreement; (iii) any loan of
money by Seller to any Person for which the outstanding principal amount as
of the date hereof exceeds $25,000 or any contract or agreement obligating
Seller to make such a loan of money (provided, however, that sales by
Seller to customers on payment or credit terms consistent with industry
custom and practice shall not constitute a loan for these purposes); (iv)
any guaranty by Seller of the obligation of any other Person in an amount
which as of the date hereof is reasonably estimated by Seller to exceed
$50,000; (v) any contract or agreement by which Seller has agreed not to
compete with another Person in Business or by which another Person has
agreed not to compete with Seller in the Business; (vi) any other contract
or agreement that is material to the Business as presently conducted by
Seller or to any Assets material to the Business; (vii) any contract or
agreement by which Seller has been granted a license to use any of the
Intellectual Property; (viii) any rights of first refusal, buy/sell, option
or similar rights in favor of Persons other than Seller with respect to the
Business or any Asset material to the Business; and (ix) any material
amendment or modification to any of the foregoing.
(B) Except as disclosed on Schedule 3.1.6(B), (i) all of the
Material Contracts are valid and binding against Seller; and (ii) no
defaults by Seller exist thereunder nor has any event occurred which,
solely with the giving of notice or the lapse of any applicable cure
period, or both, would constitute a default by Seller under any Material
Contract, except where a default or termination of such Material Contract
would not have a material adverse effect upon the operation of the Assets
or the Business as presently conducted by Seller. To the knowledge of the
Seller Parties, except as disclosed on Schedule 3.1.6(B), (i) all of the
Material Contracts are valid and binding against the other parties thereto
(or their successors in interest); (ii) no defaults by the other parties
thereto (or their successors in interest) exist thereunder nor has any
event occurred which, solely with the giving of notice or the lapse of any
applicable cure period, or both, would constitute a default by such other
parties (or their successors in interest) under any Material Contract,
except where a default or termination of such Material Contract would not
have a Material Adverse Effect upon the Business as presently conducted by
Seller or any Assets material to the Business; and (iii) execution of this
Agreement and the consummation of the transactions contemplated herein
shall not constitute a default under, or result in the termination of, any
Material Contract, except where a default or termination of such Material
Contract would not have a material adverse effect upon the Business as
presently conducted by Seller or any Assets material to the Business. For
the purposes of the foregoing, the matters set forth on Schedule 3.1.4
shall be deemed incorporated by reference as if such matters were set forth
in full on Schedule 3.1.6(B).
(C) Except as disclosed on Schedule 3.1.6(C), no consents or
approvals are required in connection with the assignment by Seller to Buyer
of Seller's rights and obligations under the Material Contracts, no
violations would occur under the Material Contracts in connection with or
as a result of the transfer from Seller to Buyer of the Business and
Assets, no consents or approvals are required in the Business as presently
conducted by Seller and no violations would occur under the Material
Contracts in connection with the assignment by Seller to Buyer of Seller's
rights and obligations under the Material Contracts, except where failing
to obtain such consent or such approval would not have a Material Adverse
Effect upon the Business and Assets.
3.1.7 Business and Assets. There exist no agreements or
---------------------
arrangements for the sale by Seller of the Business (including, without
limitation, calls on or other rights in favor of Persons other than Seller to
purchase such Business and Assets whether or not the same are currently being
exercised).
3.1.8 Permits.
-------
(A) Schedule 3.1.8 contains a true and complete listing of
all Permits that Seller holds or for which Seller has applied.
(B) Except as disclosed on Schedule 3.1.8, (i) to the
knowledge of the Seller Parties, Seller holds, or has applied for, or is in
the process of applying for, all Permits material to the ownership and
operation of the Business as presently conducted by Seller and to the
Assets which are material to the Business; (ii) all such Permits held by
Seller are in full force and effect, and to the knowledge of the Seller
Parties, all applications for such Permits are complete; and (iii) Seller
is in compliance in all material respects with such Permits. For the
purposes of the foregoing, the matters set forth on Schedule 3.1.4 and
Schedule 3.1.9 shall be deemed incorporated by this reference as if such
matters were set forth on Schedule 3.1.8 in full.
3.1.9 Compliance with Laws. Except as disclosed on Schedule
----------------------
3.1.9, Seller is in compliance in all material respects with all Permits,
judgments, orders, decrees, injunctions, statutes, rules, regulations, and other
legal or administrative requirements of all Government Authorities having
jurisdiction over the operation of the Assets and/or the Business, except where
non-compliance would not have a material adverse effect upon the Business as
presently conducted by Seller or any Assets material to the Business. Except as
set forth in Schedule 3.1.9, Seller has not received any written notice of a
material violation of any such Permit, judgment, order, decree, injunction,
statute, rule, regulation or other legal or administrative requirement from any
Government Authority having jurisdiction other than violations which, to the
best of Seller's knowledge, have been cured or remedied to such Government
Authority's satisfaction. For the purposes of the foregoing, the matters set
forth on Schedule 3.1.3, Schedule 3.1.4, Schedule 3.1.8, Schedule 3.1.10,
Schedule 3.1.12, Schedule 3.1.14 and Schedule 3.1.20(A) shall be deemed
incorporated by this reference as if such matters were set forth on Schedule
3.1.9 in full.
3.1.10 Labor and Employment Matters.
-------------------------------
(A) Seller is providing, on Schedule 3.1.10, a true and
complete listing, to the best of Seller's knowledge and belief, upon due
inquiry, of all Employees as of the date thereof, including approximate
date of hire, title or grade as of the date thereof, salary or rate of
compensation as of the date thereof, exempt or non-exempt status, and
active or leave status. Except for any agreements disclosed on Schedule
3.1.10 and any Seller Benefit Plan, none of the Employees is a party to any
written employment contract, agreement or commitment, termination or
severance agreement or similar contract or agreement, and the employment of
all such Employees is terminable at will (subject, however, to applicable
laws governing the termination of employees generally).
(B) There are no collective bargaining agreements or other
similar agreements with respect to Employees, and no Employees are
represented by any labor organization or collective bargaining
representative. Except as disclosed on Schedule 3.1.10, Seller is in
compliance in all material respects with all applicable laws, rules and
regulations pertaining to labor or employment matters, practices, wages,
benefits and hours.
(C) Except as disclosed on Schedule 3.1.10, to the knowledge
of the Seller Parties, there is not currently underway any organized effort
to unionize Employees who are employed by Seller as of the date hereof and
there are no union certification or representation issues pending before
any Government Authority.
3.1.11 Intellectual Property. The Patents set forth on Schedule
----------------------
1.1.8 hereto constitute all of the patents owned by or licensed to Seller, and
used by Seller in the Business that are material to the operation of the
Business as currently conducted by Seller. The Marks set forth on Schedule
1.1.8 hereto constitute all of the Marks owned by Seller and used by Seller in
the Business that are material to the operation of the Business as currently
conducted by Seller. As configured and operating on the Closing Date, (i) the
Business does not knowingly and unlawfully infringe upon or misappropriate the
Intellectual Property of any other Person; and (ii) to the knowledge of the
Seller Parties, the Intellectual Property is not being unlawfully infringed upon
or misappropriated by any other Person. Except as disclosed on Schedule 3.1.11,
Seller has the right to assign or license, as applicable, to Buyer its right,
title and interest in the Intellectual Property. Notwithstanding anything in
this Agreement to the contrary, Seller makes no representation to Buyer
regarding ownership of, title to, the right to use, assign or license U.S.
Patent Registration No. 5,565,750. With respect to Intellectual Property of
which Seller is licensee, Seller has the right to use such Intellectual Property
as they are currently being used by Seller in the Business.
3.1.12 No Material Adverse Effect. Except as disclosed on
-----------------------------
Schedule 3.1.12, there has been no Material Adverse Effect since June 30, 2000.
For the purposes of the foregoing, the matters set forth on Schedule 3.1.4 and
Schedule 3.1.9 shall be deemed incorporated by this reference as if such matters
were set forth on Schedule 3.1.12 in full.
3.1.13 Taxes. Except as set forth on Schedule 3.1.13, Seller has
-----
filed all material non-income tax returns that are required to be filed by
Seller with respect to the Assets or the Business through the Closing Date, such
returns are true, correct and complete in all material respects and were
prepared in conformity with all applicable laws and regulations, and except as
otherwise set forth in this Agreement, Seller shall have paid all taxes
required to be reported on such returns which are due and are attributable to
any taxable period or portion thereof that ends on or before the Closing Date.
3.1.14 Financial Statements. Schedule 3.1.14 consists of the
---------------------
audited financial statement and balance sheet of the Business as of and for the
year ending December 31, 1999 and the unaudited financial statement and balance
sheet of the Business as of and for the six (6) month period ending June 30,
2000, (collectively, the "Financial Statements"). Such Financial Statements
fairly present in all material respects the financial condition and results of
operations of the Business at the date and for the period indicated and have
been prepared in accordance with GAAP. To the knowledge of the Seller Parties,
the Financial Statements do not contain any material items of a special or
nonrecurring nature, except as expressly stated therein. The Financial
Statements have been prepared from the books and records of the Seller, which to
the knowledge of the Seller Parties, accurately and fairly reflect the
transactions of, acquisitions and dispositions of assets by, and incurrence of
liabilities by the Seller with respect to the Business. To the knowledge of the
Seller Parties, the Seller has no material Liabilities of or relating to the
business of the Seller except for (i) Liabilities reflected on the Financial
Statements, (ii) current liabilities incurred in the ordinary course of business
and consistent with past practice after the latest Financial Statements, (iii)
ordinary course obligations under the Material Contracts and under other
agreements entered into by the Seller in the ordinary course of the Seller's
business that are not included within the definition of Material Contracts.
3.1.15. Absence of Material Adverse Change. Except as set forth
------------------------------------
in Schedule3.1.12, since the latest Financial Statement date, except as
specifically contemplated by this Agreement, there has not been, (a) any
material adverse change in the condition (financial or otherwise), results of
operations, assets or Liabilities of the Seller or with respect to the manner in
which the Seller conducts its business or operations; (b) any payment or
transfer of assets to or for the benefit of any stockholder of the Seller, other
than compensation and expense reimbursements paid in the ordinary course of
business, consistent with past practice; (c) any breach or default by the Seller
or, to the knowledge of Sellers, any other party (or event that with notice or
lapse of time would constitute a breach or default), termination or threatened
termination under any Material Contracts; (d) any change by the Seller in its
accounting methods, principles or practices; (e) any increase in the benefits
under, or the establishment or amendment of, any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing or other employee
benefit plan, or any increase in the compensation payable or to become payable
to directors, officers or employees of Seller, except for annual merit increases
in salaries or wages in the ordinary course of business and consistent with past
practice; (f) any theft, condemnation or eminent domain proceeding or any
material damage, destruction or casualty loss affecting any asset used in the
business of the Seller, whether or not covered by insurance; (g) any sale,
assignment or transfer of any asset of the Seller, except sales of inventory in
the ordinary course of business and consistent with past practices or any sales
of obsolete equipment no longer used in the business of the Seller; (h) any
waiver by the Sellers of any material rights related to the Business or the
Assets; (i) any other transaction, agreement or commitment entered into by the
Seller or affecting the Seller's business, operations or assets, except in the
ordinary course of business and consistent with past practices or (j) any
agreement or understanding to do or resulting in any of the foregoing.
3.1.16 Receivables. This section deleted by agreement.
-----------
3.1.17 Seller Benefit Plans. Except as disclosed on Schedule 3.1.17,
--------------------
neither the Seller nor any ERISA Affiliate contributes or has at any time within
the six calendar year period preceding the Closing Date contributed or had an
obligation to contribute to a multi-employer plan (as defined in Section 3(37)
of ERISA) on behalf of the Employees who are employed by Seller as of the date
hereof which would give rise to any liability to Buyer.
(B) Following the Closing, Buyer will have no liabilities under,
resulting from, or relating to the Seller Benefit Plans and will have no
obligation to continue or replace any of the Seller Benefit Plans, except
as expressly provided in Article 11 below.
(C) The Seller's 401(k) plan is qualified under Code 401(a), and
has been operated in compliance with all applicable laws and regulations
and in accordance with the terms of the plan.
3.1.18 Title to Assets. Seller has good title and/or a valid
-----------------
ownership interest, or a valid leasehold interest, in each of the Assets free
and clear of all liens, claims and encumbrances other than Permitted
Encumbrances and as set forth on Schedule 3.1.18. Upon consummation of the
transactions contemplated hereby, Buyer will have acquired good title and/or a
valid ownership interest, or a valid leasehold interest, in each of the Assets,
free and clear of any liens or encumbrances, except for Permitted Encumbrances
and liens and encumbrances created by or through Seller.
3.1.19 Litigation. No injunction or order has been issued
----------
restraining or prohibiting, nor shall any law or decision have been rendered
making unlawful, or which would substantially delay or make substantially more
burdensome (1) any transaction contemplated by this Agreement, (2) Buyer's
ownership or use of the Business or any Assets material to the Business, nor has
any Governmental Authority filed an action or threatened to file an action
seeking any of the foregoing.
3.2 Representations and Warranties of Buyer. Buyer represents and
warrants to the Seller parties as follows:
3.2.1 Organization and Good Standing. Buyer is a limited
---------------------------------
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own and lease the properties and assets it owns and leases and to carry on its
business as such business is presently conducted. Buyer is duly licensed or
qualified to do business in the State and all other jurisdictions in which the
character of the properties and assets owned or leased by it or the nature of
the business conducted by it requires it to be so licensed or qualified, except
where the failure to be so licensed or qualified would not have a material
adverse effect on Buyer, taken as a whole, or the transactions contemplated by
this Agreement, taken as a whole.
3.2.2 Corporate Authority; Authorization of Agreement. Buyer has
------------------------------------------------
all requisite corporate power and authority to execute and deliver this
Agreement and the documents provided for herein to be executed and delivered by
Buyer at Closing, to consummate the transactions contemplated hereby and to
perform its obligations under this Agreement and related documents. Buyer has
taken all proper corporate action to authorize and approve the execution and
delivery of this Agreement and the documents provided herein to be executed and
delivered by Buyer at Closing, the performance of all the terms and conditions
hereof and thereof to be performed by Buyer and the consummation of the
transactions contemplated hereby and thereby. No other act or proceeding on the
part of Buyer is necessary to authorize the execution, delivery or performance
of this Agreement or such other documents, or the transactions contemplated
hereby or thereby. This Agreement constitutes (and the documents provided for
herein to be executed and delivered at the Closing by Buyer will, when executed
and delivered, constitute) the legal, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms.
3.2.3 No Violation. The execution and delivery by Buyer of this
-------------
Agreement and the documents provided herein to be executed and delivered by
Buyer at Closing, the consummation by Buyer of the transactions contemplated
hereby and thereby, and the compliance by Buyer with the terms hereof and
thereof, do not and will not (i) violate or conflict with or result in a breach
of any provisions of or constitute a default (or an event which, with notice or
lapse of any applicable cure period, or both, would constitute a default), or
require a consent under, or result in the termination of, or accelerate the
performance required by or result in the creation of any lien upon any of the
Assets under, any of the terms, conditions or provisions of the articles of
incorporation, bylaws or similar charter documents of Borrower or, (ii) any
order, writ, injunction, decree, statute, rule or regulation of any Government
Authority applicable to Buyer or to the Assets.
3.2.4 Litigation. There is no action, suit, proceeding or
----------
investigation pending against Buyer or its affiliates which has been served on
Buyer of its affiliates or, to the best of Buyer's knowledge, threatened against
Buyer or its affiliates by which any Person seeks to restrain or enjoin the
performance by Buyer of this Agreement.
3.2.5 Brokers. No person acting on behalf of Buyer has any valid
-------
claim against Seller for any brokers or finder's fee or similar compensation in
connection with the transactions contemplated hereby. Buyer shall indemnify,
defend and hold Seller harmless from and against any and all Claims by any
person alleging a right to a broker or finder's fee from or through Buyer.
3.2.6 No Knowledge of Breach by the Seller Parties. Buyer has no
----------------------------------------------
knowledge of any Breach by Sellers of any of the representations and warranties
of Sellers as set forth in Section 3.1 above.
3.2.7 Financing. Buyer has, and at the Closing will have,
---------
sufficient cash, available lines of credit, or other sources of immediately
available funds to enable it to pay the Purchase Price to the Seller at the
Closing.
3.3. Waiver of Implied Warranties
-------------------------------
(i) THE REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES CONTAINED IN
THIS AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF, ANY OTHER
REPRESENTATION OR WARRANTY EXPRESS OR IMPLIED. THE SELLER PARTIES MAKE
NO REPRESENTATIONS OR WARRANTIES AND DISCLAIM ALL LIABILITY AND
RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT OR
INFORMATION ORALLY OR IN WRITING MADE OR COMMUNICATED TO BUYER
INCLUDING BUT NOT LIMITED TO ANY OPINION, INFORMATION OR ADVICE WHICH
MAY HAVE BEEN PROVIDED TO BUYER BY THE SELLER PARTIES; AND (B) SELLER
HAS NOT MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, ANY
IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE.
(ii) THE SELLER PARTIES EXPRESSLY DISCLAIM AND NEGATE, AND BUYER HEREBY
WAIVES, (x) ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE QUALITY
OR CONDITION OF THE ASSETS; (y) ANY IMPLIED WARRANTY OR
REPRESENTATION, AS TO THE QUALITY, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, CONFORMITY TO MODELS OR SAMPLES, OR CONDITION OF
ANY OF THE ASSETS OR ANY PART THEREOF; AND (z) ALL REPRESENTATIONS AND
WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, OTHER THAN THE EXPRESS
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT.
(iii)THE ITEMS OF PERSONAL PROPERTY, INVENTORY, EQUIPMENT, IMPROVEMENTS,
FIXTURES AND APPURTENANCES CONVEYED AS PART OF THIS AGREEMENT ARE
TRANSFERRED, AND BUYER ACCEPTS SUCH ITEMS "AS IS, WHERE IS AND WITH
ALL FAULTS."
(iv) EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT, THERE ARE NO
REPRESENTATIONS AND WARRANTIES MADE BY OR ON BEHALF OF THE SELLER
PARTIES.
(v) THE SELLER PARTIES AND BUYER ACKNOWLEDGE THAT THE WAIVERS IN THIS
SECTION 3.3 ARE CONSPICUOUS, AND ARE CAPITALIZED IN NOTICEABLE TYPE.
ARTICLE 4. DUE DILIGENCE
4.1 Access to Assets. Upon execution of this Agreement, and until
------------------
Closing, and as long as Buyer complies with Section 4.2, Buyer shall have the
reasonable right to enter upon the Real Property and inspect the Assets located
thereon and conduct such physical, topographical, geological, environmental,
drainage, soil and engineering studies or inspections as Buyer may reasonably
desire. Based upon the results of such studies or inspections, Buyer may, at
its sole discretion, terminate this Agreement, and upon such termination Seller
shall return to Buyer all down payments or ▇▇▇▇▇▇▇ money. Buyer shall provide
Seller reasonable prior notice of any access under this Article. All access,
inspections and tests shall be non-destructive in nature and Seller shall be
notified and shall have the right to approve the protocol of any such tests
prior to commencement of the test. Any and all access and tests shall be done
at the sole cost and expense of Buyer, who shall indemnify Seller for any and
all claims arising directly from Buyer's tests.
4.2 Access to Records. Upon reasonable notice from Buyer, Seller shall
-----------------
provide Buyer reasonable access during Seller's regular business hours to the
Records. The disclosure of any privileged document or information to Buyer
shall not constitute a waiver of the applicable privilege, and Buyer shall
promptly following written request of Seller return to Seller all originals,
copies and derivations of any such document or information unless such document
or information primarily relates to the Assets or an Assumed Liability. Any and
all access shall be done at the sole cost and expense of Buyer, who shall
indemnify Seller for any and all claims arising from Buyer's activities.
4.3 Access to Persons. Seller shall provide Buyer reasonable access
-------------------
during Seller's regular business hours to Seller's employees, agents and
representatives. Notwithstanding the foregoing, Buyer shall not contact any of
Seller's employees, agents or representatives unless and until the parties shall
have reasonably agreed (orally or in writing) upon the manner in which and terms
pursuant to which such access shall be provided, including any agreements or
understandings (orally or in writing) made prior to the date hereof. Any and
all access shall be done at the sole cost, liability, risk and expense of Buyer.
4.4 Other Due Diligence. Prior to the Closing, and subject to the
---------------------
terms and conditions of this Agreement, Buyer may conduct such other examination
or investigation of public records relating to the Assets or third persons
having knowledge of the Assets as Buyer may choose to conduct in its discretion.
4.5 Supplemental Disclosures. From time to time prior to the Closing,
-------------------------
the Seller will promptly deliver a Supplemental Disclosure with respect to any
matter hereafter arising which, if existing or occurring at or prior to the date
hereof, would have been required to be set forth or listed in the Schedules
hereto or which is necessary to complete or correct any information in the
Schedules.Any matters set forth on the Supplemental Disclosurewhich are not
cured or remedied by Seller prior to Closing or waived by Buyer, and any Claims
relating thereto, shall survive Closing and shall be subject to Article 10
hereof. Any matters set forth on the Supplemental Disclosure shall be subject
to the provisions of 4.6.
4.6 Inaccuracies of Representations and Warranties. Should Buyer
--------------------------------------------------
reasonably determine that any one or more of the representations and warranties
of Seller Parties set forth in Section 3.1 are or would be untrue or misleading
as of the Closing Date, then Buyer shall deliver written notice thereof to
Seller Parties prior to the Closing Date. Thereafter, Seller Parties may make
reasonable efforts to cure or remedy such inaccuracies or the effect on value of
such inaccuracies to Buyer's reasonable satisfaction prior to the Closing Date.
If Seller Parties do not cure or remove such inaccuracies, including without
limitation any Supplemental Disclosures, or any other item Buyer was aware of,
then Buyer may elect, by written notice, not to Close and to terminate all
further obligations of the parties to each other (except for those obligations
which survive pursuant to Subsection 10.2.1).
ARTICLE 5. OPERATIONS
5.1 Permits; Environmental Requirements. Buyer shall be solely
-------------------------------------
responsible for compliance with Permits and Environmental Requirements (except
to the extent such Permits and Environmental Requirements relate to Pre-Closing
Environmental Liabilities, for which Seller shall remain financially responsible
and liable) affecting the Business and the Assets after the Closing (whether or
not Seller is the permit holder under such Permits).
ARTICLE 6. PRE-CLOSING COVENANTS
6.1 Certain Covenants of Seller Pending Closing. Between the date
-------------------------------------------
of this Agreement and the Closing Date:
6.1.1 Conduct of Business. Except as expressly permitted by this
--------------------
Agreement or as otherwise approved by Buyer in writing, Seller shall have:
(A) conducted the Business in substantially the same manner
as heretofore conducted by Seller in all material respects;
(B) used reasonable efforts to (i) maintain in effect all
Permits material to the operation of the Assets which are material to the
Business as presently operated by Seller; (ii) maintain the Assets material
to the Business in their present operating condition and repair (normal
wear and tear excepted); (iii) keep available the services of the Employees
who are employed by Seller as of the date hereof (other than Employees who
Buyer informs Seller will not be Transferred Employees, and Employees who
resign or are terminated for cause); and (iv) maintain its relationships
with customers, suppliers and others having business dealings with it;
(C) made payments in respect of accounts payable and other
obligations of the Business in a manner and at times consistent, in the
aggregate, with prior practice;
(D) performed in all material respects its obligations under
the Material Contracts, and comply in all material respects with all
applicable laws applicable to the Business;
(E) not entered into or assume any contract or agreement
which, if entered into or assumed prior to the date hereof, would be a
Material Contract;
(F) not granted (or committed to grant) any increase, other
than periodic increases and bonuses consistent with past practices, in the
compensation of any Employee or institute, adopt or amend (or commit to
institute, adopt or amend) any compensation or benefit plan, policy,
program or arrangement or collective bargaining agreement applicable to any
such Employee, except as otherwise expressly provided in this Agreement or
as otherwise disclosed by Seller to Buyer.
6.1.2 Expenses. Seller shall not have made any commitments to
--------
expend funds or otherwise incur any other obligations or liabilities in excess
of $50,000 per such expense, in connection with the ownership or operation of
the Assets, other than (i) expenses incurred in the normal operation of the
Assets; (ii) commitments, obligations and liabilities which will be satisfied as
of the Closing Date; (iii) expenses incurred to resolve emergency conditions,
(iv) as may be required pursuant to the terms of Permits; (v) expenses which
Seller has reserved against on the financial statements referred to in
Subsection 3.1.14; and (vi) expenses payable under or pursuant to the Material
Contracts.
6.1.3 Transfers. Except as otherwise provided herein, Seller shall
---------
not have sold, transferred or abandoned any portion of the Assets other than the
sale, transfer or abandonment, in the ordinary course of conducting the
Business, of Assets or having a per item fair market value of more than $50,000.
6.1.4 Material Contracts. Seller shall not have amended, altered,
-------------------
modified, waived or terminated any Material Contract.
6.1.5 Financial Statements. Seller shall provide to Buyer audited
---------------------
financial statements of the Business (including balance sheets and statements of
operations and cash flows) as of and for the year ending December 31, 1999, and
unaudited financial statements of the Business for the six (6) month period
ending June 30, 2000, prepared in accordance with GAAP. Seller shall promptly
deliver copies thereof to Buyer upon receipt and/or preparation of such
financial statements, but in no event later than the Closing Date.
6.1.6 Transfer of Permits. Seller shall reasonably cooperate with
-------------------
Buyer with regard to the application for transfer of any Permits.
6.1.7 Closing Conditions. Seller shall make reasonable best
-------------------
efforts to satisfy all conditions necessary to Close and shall reasonably
cooperate in good faith with Buyer in Buyer's efforts to Close.
ARTICLE 7. TAXES; PRORATIONS
7.1 Payment of Ad Valorem and Property Taxes. To the extent that they
-----------------------------------------
are accurately reflected on the June 30, 2000 balance sheet of the Financial
Statements and have been accrued on a consistent basis since June 30, 2000 to
the Closing Date, all ad valorem taxes, personal property taxes, special
assessments, direct assessment, general assessments and similar obligations (and
any refunds, credits and the like) for the appropriate periods shall be paid by
Buyer notwithstanding the period of ownership of Seller or Buyer. Buyer shall
file or cause to be filed all required reports and returns incident to such
taxes, assessments and similar obligations which are due on or after Closing,
and shall pay or cause to be paid to the taxing authorities all such taxes,
assessments and similar obligations reflected on such reports or returns.
7.2 Sales, Use and Transfer Taxes. Buyer shall be liable for and pay
-------------------------------
any stamp, deed, transfer, sales, use, excise, business, occupation, franchise
or other similar taxes imposed in connection with the transfer of the Assets.
Buyer shall be liable for and pay any conveyance, transfer and recording fees or
taxes imposed in connection with the transfer of the Assets. Buyer shall be
liable for and pay any penalties and interest which may accrue as a result of
Buyer's failure to make timely payment.
ARTICLE 8. CLOSING
8.1 The Closing. The Closing shall be consummated at 10:00 a.m.
------------
Central Standard Time on the Closing Date at the offices of Thompson, Knight,
▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
or at such other place and hour as may be mutually agreed upon by Seller and
Buyer. If either Seller or Buyer has not performed the conditions to Closing
applicable to such party hereunder and the performance of such conditions have
not been waived, in either case as of the Closing Date, then the party that has
performed and stands ready to close shall have the one-time right (but not the
obligation) to postpone the date of Closing to a business day no later than
fifteen calendar days from the Closing Date.
8.2 Events at Closing. At Closing:
-------------------
8.2.1 Seller shall:
(A) Execute, acknowledge and deliver to Buyer a Special
Warranty Deed for the Real Property substantially similar to the form set
forth in Exhibit B.
(B) Execute and deliver to Buyer the ▇▇▇▇ of Sale.
(C) Execute and deliver to Buyer one original affidavit or
other certification (as permitted by such code) that Seller is not a
"foreign person" within the meaning of Section 1445 (or similar provisions)
of the Internal Revenue Code of 1986, as amended (i.e., Seller is not a
nonresident alien, foreign corporation, foreign partnership, foreign trust
or foreign estate as those terms are defined in such code and the
regulations promulgated thereunder).
(D) Execute and deliver to Buyer one original withholding
exemption certificate for each state in which the Assets are located which
has a law similar to Section 1445 of the Internal Revenue Code.
(E) Transfer to Buyer (subject to the terms of applicable
operating agreements and other provisions hereof) possession and control of
all of the Assets effective as of the Closing Date.
(F) Buyer shall have received an opinion of Seller's Counsel
to the effect set forth in Subsections 3.1.1, 3.1.2, 3.1.3 (to the best of
their knowledge), and 3.1.4 (to the best of their knowledge) and that the
forms of conveyance documents are legally sufficient to convey to Buyer all
of Seller's right, title and interest in the Assets, in form and in
substance reasonably satisfactory to Buyer.
(G) Seller shall have obtained all consents and approvals
which are required in connection with transactions contemplated hereby,
other than consents and approvals which Buyer and Seller reasonably agree
are not material.
8.2.2 Buyer shall:
(A) Deliver to Seller the Purchase Price less the Escrow
Amount.
(B) Buyer shall retain Five Hundred Thousand Dollars
($500,000.00) (the "Escrow Amount") until the earlier of the parties'
agreement as to the Final Settlement Statement or January 1, 2001, at which
time the Escrow Amount, plus interest accrued thereon at the "Escrow Rate"
(as defined herein), shall be delivered to Seller by wire transfer of
immediately available funds to an account designated by Seller; provided,
however, that Buyer shall not deliver any portion of the Escrow Amount
which is the subject to either (x) an unpaid claim for indemnification
under Article 10 of which Seller has been notified in writing prior to
January 1, 2001 or (y) an unpaid claim for an adjustment to the Purchase
Price (either type of claim being an "Escrow Claim"). The Escrow Rate shall
be a rate of 5% per annum.
(C) Seller shall have received an opinion letter of Buyer's
in house General Counsel to the effect set forth in Subsection 3.2.1,
Subsection 3.2.2, Subsection 3.2.3 (to the best of his knowledge and with
respect to the Agreement), and Subsection 3.2.4 (to the best of his
knowledge), in form and in substance reasonably satisfactory to Seller.
(D) Buyer shall have obtained all consents and approvals
which are required under the Permits listed on Schedule 3.1.8 in connection
with the consummation of the transactions contemplated hereby and which
Buyer and Seller reasonably agree are material and necessary prior to
Closing. With respect to Permits listed on Schedule 3.1.8 for which consent
or approval is not available and which Buyer and Seller reasonably agree
are material, then Buyer shall have obtained a Permit in Buyer's name from
the Government Authority issuing such Permit listed on Schedule 3.1.8.
(E) Execute and deliver to Seller a counterpart to the ▇▇▇▇
of Sale.
8.2.3 Buyer and Seller shall:
(A) Execute and deliver assignments of the Patents and Marks
on such forms as the United States Patent and Trademark Office requires for
assignment of patents and/or trademarks or substantially in the form
Assignments attached as Exhibits C and D.
(B) Execute and deliver such other instruments and documents
as may be reasonably necessary to consummate the transactions contemplated
hereby.
8.3 Effect of Closing. Except as otherwise provided herein, all
-------------------
obligations of the parties wholly or partially to be performed after the Closing
shall survive the Closing. Without limiting the generality of the foregoing,
except as otherwise provided herein, all obligations of a party to indemnify
another person contained herein shall survive the Closing.
ARTICLE 9. POST-CLOSING COVENANTS
9.1. Final Settlement Statement. Buyer shall deliver the Final
----------------------------
Settlement Statement to Seller not later than 90 days after Closing, together
with such supplemental calculations and information as shall be reasonably
necessary or appropriate to enable Seller to determine the accuracy thereof.
Within 30 calendar days of Seller's receipt of the Final Settlement Statement,
Seller shall notify Buyer in writing whether Seller approves the Final
Settlement Statement. If Seller approves the Final Settlement Statement, or
fails to notify Buyer of its disapproval in the manner and within the time
specified above, then the Final Settlement Statement shall be as delivered to
Seller. If Seller disapproves the Final Settlement Statement, then the parties
shall use their reasonable best efforts to agree upon the amounts to be set
forth in the Final Settlement Statement, and the Final Settlement Statement
shall be amended accordingly. If Seller and Buyer cannot agree upon the amounts
to be set forth in the Final Settlement Statement, then the accounting firm of
Deloitte & Touche, LLP, or its successor, is designated to act as sole
arbitrator and to decide all points of disagreement with respect to the Final
Settlement Statement, such decision to be binding on both parties. If such firm
is unwilling or unable to serve in such capacity, Seller and Buyer shall use
reasonable best efforts to designate and retain another mutually acceptable
internationally-recognized accounting firm not retained for general audit
purposes by either of them as the sole arbitrator under this Section. If the
parties cannot agree upon the individual at any such accounting firm who will be
primarily responsible to act as arbitrator, then either party may request the
appointment of such individual by the managing partner thereof. If Deloitte &
Touche, LLP, or its successor, is unwilling or unable to serve and if the
parties are unable to jointly designate and retain another mutually acceptable
accounting firm as the sole arbitrator, then Seller or Buyer, may in writing
request that the American Arbitration Association designate an accounting or
accounting firm to serve as sole arbitrator. The costs and expenses of the
arbitrator, whether the firm designated above, or otherwise designated, shall be
shared equally by Seller and Buyer. Within 5 business days after the Final
Settlement Statement has been agreed upon or disagreements resolved, Buyer or
Seller, as the case may be, shall promptly make a payment by wire transfer of
immediately available funds to the other party in an amount equal to the
difference between the Purchase Price as set forth herein and the Purchase Price
as set forth on the Final Settlement Statement, together with interest at the
rate of 5% per annum for the period from and including the Closing Date through
and including the date of payment. Buyer shall, to the extent it is not
directly paid by Seller, be entitled after the amount of the difference in
Purchase Price, if any, is finally determined to deduct such difference as
reflected on the Final Settlement Statement from the Escrow Amount.
9.2. Accounts Receivable.
---------------------
All accounts receivable, notes receivable and other monies due and owing to
the Baylor Companies (the "Receivables") shall be correctly set forth and
reflected on the Final Settlement Statement. To the Seller's knowledge, the
Receivables are collectible net of reserves without set-off, within 120 days of
the date it first becomes due and payable. Buyer shall use commercially
reasonable efforts, consistent with its past practices to collect the
Receivables. Any Receivables remaining uncollected by Buyer after 120 days from
the Closing Date shall be repurchased by Seller under an AS IS ▇▇▇▇ of Sale and
Assignment substantially similar to Exhibit A for the full value of such
uncollected Receivables less the reserve for doubtful accounts reflected on the
Business' balance sheet as of the Date of Closing. Buyer shall, no later than
120 days from the Closing Date, tender to Seller the value of any excess reserve
for doubtful accounts for the Receivables. This section shall be Buyer's sole
remedy with respect to the Receivables.
9.3. Books and Records.
--------------------
(A) Prior to the Closing, Seller may make and retain duplicates of the
documents referred to in Sub-Section 1.2.5 above (for purposes of this Section,
"1.2.5 Data"). Seller may remove the 1.2.5 Data at any time after the date
hereof, so long as Seller maintains the 1.2.5 Data in Houston, Texas where they
are reasonably accessible to Buyer.
(B) For a period of five (5) years after the Closing Date, or for any
longer periods required by any Assumed Liability, any Environmental Liabilities
or any Government Authority or prudent in connection with ongoing litigation,
Buyer shall retain the Records in its possession and shall make such Records
available to Seller for inspection and copying upon reasonable notice at Buyer's
offices, at reasonable times and during regular office hours. Buyer shall
maintain those Records in its possession which contain non-public proprietary or
trade secret information strictly confidential and shall not disclose any such
Records to any person or Government Authority, unless such disclosure is
required by applicable law, rule or regulation. Seller shall use its reasonable
best efforts to obtain consents, waivers or releases from third parties
necessary to enable Seller to transfer to Buyer at Closing all records subject
to confidentiality obligations. Seller shall retain the documents referred to
in Sub-Section 1.2.5 in its possession and shall make such documents available
to the Buyer for inspection and copying upon reasonable notice at Seller's
offices at reasonable times and during regular business hours until such time as
the Final Settlement Statement has been agreed upon or disagreements with
respect thereto have been resolved pursuant to Sub-Section 12.1.
9.4 Public Announcements. No party hereto shall make any public
---------------------
announcement or statement with respect to this Agreement nor the transactions
contemplated hereby without the prior written consent of the other to the form,
content and timing of such announcement or statement. However, any party may
make such announcement or statement upon (a) receiving advice of its counsel
that the making of such public announcement or statement, and the specific form,
content and timing thereof, is required by applicable law, rule or regulation;
and (b) giving as much prior notice to the other party regarding the form,
content and timing as is reasonably practicable under the circumstances.
9.5 Restrictions on Sale of Assets. No sale or other transfer of any
--------------------------------
interest in any of the Assets at any time after the Closing Date shall relieve a
party to this Agreement (or any successor by merger) of any of its obligations
hereunder (including without limitation all obligations regarding Environmental
Liability) with respect to any such Assets or interest therein.
9.6 Non-Competition.
----------------
9.6.1 Scope. From the Closing Date through the third anniversary
-----
of the Closing Date, Seller Parties shall neither, directly or indirectly (i)
acquire a controlling interest in any entity that is in the Business, nor (ii)
except as provided in Section 11.1, solicit for employment any individual who is
an employee of the Buyer at such time or was an employee of the Buyer during the
year prior to such time.
9.6.2 Enforcement.
-----------
(A) Seller Parties acknowledge that their obligations under
this Section are a material inducement to Buyer's execution and performance
of this Agreement and that the restrictions contained in this Section are
reasonable as to time, geographic area and scope of activity and do not
impose a greater restraint than is necessary to protect the goodwill and
other legitimate business interests of Buyer.
(B) If the provisions of this Section are found by a court of
competent jurisdiction to contain unreasonable limitations as to time,
geographic area or scope of activity, then such court is hereby directed to
reform, such provisions to the minimum extent necessary to cause the
limitations contained therein as to time, geographical area and scope of
activity to be reasonable and enforceable.
(C) Seller Parties acknowledge that Buyer would be
irreparably harmed by any violation of its obligations under this Section
and that, in addition to all other rights or remedies available at law or
in equity, Buyer will be entitled to seek injunctive and other equitable
relief to prevent or enjoin any such violation.
9.7 Pending and Threatened Litigation.
-------------------------------------
9.7.1 Litigation. From and after the Closing Date, Seller Parties
----------
shall be solely responsible for, and shall indemnify, defend and hold Buyer
harmless from and against, the costs of defense and/or prosecution of the
proceeding identified on Schedule 3.1.4.
9.7.2 Other Litigation. Except to the extent otherwise provided
-----------------
in Subsection 9.5.1, Seller Parties shall be solely responsible for, and shall
indemnify, defend and hold Buyer harmless from and against, the costs of defense
and/or prosecution of all other actions and proceedings with respect to conduct
or sales of goods in connection with the Business occurring prior to the Closing
including any actions and proceedings pending at or threatened in writing prior
to the Closing, and the payment of any judgments or settlements with respect to
such actions and proceedings. Buyer shall, at no out-of-pocket cost to Buyer,
reasonably cooperate with Seller Parties in connection with Seller Parties'
pursuit or defense of any such action or proceeding, and any preparation or
investigation relating thereto. Without limiting the generality of the
foregoing, Buyer shall reasonably make available to Seller Parties for
interview, deposition and testimony those Transferred Employees then in Buyer's
employ having knowledge relating to such action, proceeding, preparation or
investigation and shall reasonably make available Records relating thereto.
9.8 Cooperation Regarding Permits. Seller shall reasonably cooperate
-------------------------------
with Buyer in providing information required by Buyer to obtain or transfer
Permits necessary for conducting operations and business.
9.9. Warranty Work. Buyer shall perform all service, repair,
--------------
replacement and similar work required under the Seller's written warranties for
services provided and products sold by the Business prior to the Closing Date
("WARRANTY WORK"), in a ▇▇▇▇▇▇▇-like manner and consistent with the Buyer's
practices. Prior to commencing any such Warranty Work reasonably estimated to
cost more than $5,000.00, Buyer shall notify the Seller in writing of such
Warranty Work claim, providing in reasonable detail the then known the
contractual basis therefor, the scope of the Warranty Work proposed to be
performed and the estimated expense, if possible, to be incurred in connection
therewith. Upon receipt of notice of a claim for Warranty Work, the Seller
shall promptly, but in no more than two (2) business days, advise Buyer in
writing of any objections the Seller may have that the proposed scope of
Warranty Work exceeds that required under the Seller's pre-closing written
warranty requirements, specifying the basis therefor, and the parties shall
thereafter attempt to negotiate, diligently and in good faith, a mutually
satisfactory resolution to any matters in dispute. Buyer may proceed with the
Warranty Work upon the earlier to occur of (i) three (3) business days after the
Seller's receipt of notice of the claim for Warranty Work, if Buyer has not
received prior notification of the Seller's objections thereto or (ii) the
parties' resolution of all disputed matters with respect to such claim. The
Buyer shall not make a claim for reimbursement by Seller until it has utilized
the warranty reserve as reflected on the Final Settlement Statement and then any
such claim shall be subject to Section 10.4.1. Seller shall reimburse Buyer for
any such Warranty Work in an amount equal to Buyer's standard costs.
9.10 Seller Employee Plans. To the extent permissible under applicable
---------------------
law, Seller shall cause an amount equal to any remaining balance held in
Seller's Medical Care Reimbursement Plan and Dependent Care Assistance Plan to
be transferred to the Buyer and Buyer shall use such amount for the benefit of
all Transferred Employees.
ARTICLE 10. INDEMNIFICATION; SURVIVAL
10.1 Certain Agreements and Acknowledgements. The provisions of this
-----------------------------------------
Article 10 are the result of mutual compromise and an allocation of risk with
respect to the subject matter hereof. The provisions of this Article 10 have
been given individual weight by the parties in connection with entering into
this Agreement and the setting of the Purchase Price. Buyer and Seller Parties
intend that the allocations of risk and responsibility contained in this Article
10 are mutually intended by them to be given full effect and that the rights and
remedies contained in this Article 10 are exclusive of all other statutory and
common law rights and remedies with respect to the subject matter of this
Article 10.
10.2 Indemnification.
----------------
10.2.1 Seller's Indemnification. From the period after the
-------------------------
Closing Date until September 1, 2001, Seller Parties shall defend, indemnify and
hold Buyer harmless from and against (a) any and all Claims (whether third-party
or otherwise), arising out of, resulting from or relating to (i) the ownership
and/or operation of the Assets or the Business by any Person before the Closing
Date, except the Assumed Liabilities; (ii) any misrepresentation or inaccuracy
of any representation or warranty made by Seller Parties in this Agreement;
(iii) any other liability or obligation expressly retained by Seller Parties
under this Agreement; and (iv) the breach of, or failure to perform or satisfy,
any of the covenants of Seller Parties set forth in this Agreement. Provided
however, Seller Parties' indemnification of Buyer from and against any and all
Claims arising out of, resulting from or relating to Pre-Closing Environmental
Liabilities shall continue until September 1, 2002. Seller Parties shall defend
Buyer from and against any allegation made by a third party that, if true, would
constitute a misrepresentation or inaccuracy of any representation or warranty
made by Seller Parties in this Agreement.
10.2.2 Buyer's Indemnification. From the period after the Closing
-----------------------
Date until the September 1, 2001, Buyer shall defend, indemnify and hold Seller
Parties harmless from and against (a) any and all Claims (whether third-party or
otherwise), arising out of, resulting from or relating to (i) the ownership
and/or operation of the Assets or the Business by any Person after the Closing
Date including without limitation the Assumed Liabilities; (ii) any
misrepresentation or inaccuracy of any representation or warranty made by Buyer
in this Agreement; (iii) any other liability or obligation expressly retained by
Buyer under this Agreement; and (iv) the breach of, or failure to perform or
satisfy, any of the covenants of Buyer set forth in this Agreement. Buyer shall
defend Seller from and against any allegation by a third party that, if true,
would constitute a misrepresentation or inaccuracy of any representation or
warranty made by Buyer in this Agreement. Provided however, Buyer shall
indemnify the Seller Parties, until September 1, 2002, from and against any and
all Claims arising out of, resulting from or relating to Environmental
Liabilities which arise from the Business or Real Property from or after the
Closing Date.
10.3 Claims Procedure. Promptly upon discovery of a Claim with respect
----------------
to which the party giving notice believes it may be entitled to indemnity or
defense, Seller Parties or Buyer, as may be the case, shall give prompt written
notice to the other thereof. The party giving notice of a Claim shall be
referred to as the "Indemnified Party" and the party receiving notice of a Claim
shall be referred to as the "Indemnifying Party." In the event that the
Indemnified Party gives notice of a Claim to the Indemnifying Party, such notice
shall set forth the facts known to the Indemnified Party pertaining to the Claim
and shall specify the manner in which the Indemnified Party proposes to respond
to the Claim. Within ten days of receipt of such notice, the Indemnifying Party
shall commence the investigation of the Claim specified in such notice and shall
complete such investigation within thirty (30) days of Indemnifying Party's
receipt of such notice. Within ten (10) days of the completion of the
investigation, the Indemnifying Party shall state in writing: (i) whether the
Indemnified Party may proceed to respond to the Claim in the manner set forth in
its notice and (ii) whether the Indemnifying Party shall assume responsibility
for and conduct the negotiation, defense or settlement of the Claim, and if so,
the specific manner in which the Indemnifying Party proposes to proceed. If the
Indemnifying Party does elect to assume responsibility and such control, (i) its
defense against the Claim shall be conducted by the Indemnifying Party and its
counsel at its expense in a manner reasonably satisfactory and effective to
protect the Indemnified Party to the extent required hereunder and (ii) the
Indemnifying Party and its counsel shall keep the Indemnified Party fully
advised as to its conduct of such defense. If the Indemnifying Party shall
undertake at any time to compromise any such Claim, it shall promptly notify the
Indemnified Party of its intention to do so and shall obtain the Indemnified
Party's prior written consent to any final compromise or settlement, which
consent shall not be unreasonably withheld. If the Indemnifying Party should
fail to defend against any such Claim to the extent required hereunder, then the
Indemnified Party may assume control of the defense and, with the consent of the
Indemnifying Party, which shall not be unreasonably withheld, settle the Claim
at the Indemnifying Party's expense. Notwithstanding the foregoing, the
Indemnified Party shall have the right at all times to participate in the
defense of any Claim hereunder with its own counsel and at its own expense. All
provisions of this Agreement requiring a party to indemnify another person
(including without limitation those set forth in Article 5) shall be deemed to
incorporate this Section by reference, and all notices and actions relating to
Claims thereunder shall be made in the manner set forth in, and subject to the
terms and conditions of, this Section 10.3 (except to the extent that Article 5
provides alternate or supplemental procedures applicable thereto).
10.4 Limitation on Liability.
--------------------------
10.4.1 Threshold For Indemnification. Notwithstanding anything
-------------------------------
herein to the contrary, neither the Seller Parties nor Buyer shall have any
obligation to indemnify, defend and/or hold any Person harmless from or against
any Claims arising out of, resulting from or related to (x) any
misrepresentation or inaccuracy of any representation or warranty made by such
party in this Agreement, or in any other agreement, instrument or certificate
delivered in connection herewith, (y) any warranty claim in excess of the
warranty reserve as reflected on the Final Settlement Statement, or (z) any
breach, default or nonperformance by such party of any agreement, covenant or
obligation contained in Article 10, unless and until the aggregate damage or
loss actually incurred by such party in connection with all such Claims exceeds
$300,000.00, in which case the indemnity hereunder shall apply to such Claims
and any individual future Claim or Claims incurred by the members of Buyer or
Seller, as the case may be. The foregoing threshold limitation shall not apply
to any breach with respect to the Final Settlement Statement adjustment under
Section 9.1 or the Receivables adjustment under Section 9.2. hereof.
10.4.2 Limitation on Indemnification. Notwithstanding anything
-------------------------------
herein to the contrary, the Seller Parties nor Buyer shall have any obligation
to indemnify, defend and/or hold any Person harmless from or against any Claims
in excess of the Ten Million Dollars ($10,000,000.00).
10.4.3 Intentional Breach. Notwithstanding anything herein to the
------------------
contrary, the limitations contained in Section 10.4.1 and Section 10.4.2 shall
not apply to any Claims, arising out of, resulting from or related to any
fraudulent misrepresentation or a willful breach by a party of a covenant
contained herein.
10.5 Survival of Representations and Warranties. The express
----------------------------------------------
representations and warranties contained in this Agreement shall survive until
September 1, 2001, provided that if a claim is made in writing prior to
September 1, 2001 or a legal action is commenced in a court of competent
jurisdiction with respect thereto prior to September 1, 2001, then the Claim
relating to such representation and warranty shall survive until a final
judgment is entered in such action. Seller Parties' representations and
warranties concerning or relating to Pre-Closing Environmental Liabilities shall
continue until September 1, 2002, provided that if a claim is made in writing
prior to September 1, 2002 or a legal action is commenced in a court of
competent jurisdiction with respect thereto prior to September 1, 2002, then the
Claim relating to such representation and warranty concerning or relating to
Pre-Closing Environmental Liabilities shall survive until a final judgment is
entered in such action.
10.6 Exclusive Remedy. THE PARTIES ACKNOWLEDGE AND AGREE THAT THE
-----------------
REMEDIES SET FORTH IN THIS AGREEMENT, INCLUDING THE DEDUCTIBLES, LIABILITY
LIMITS, SURVIVAL PERIODS, DISCLAIMERS AND LIMITATIONS ON REMEDIES, ARE INTENDED
TO BE, AND SHALL BE, THE EXCLUSIVE REMEDIES WITH RESPECT TO ANY ASPECT OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
ARTICLE 11. EMPLOYMENT MATTERS
11.1 Offers of Employment. Buyer shall offer to employ a minimum of
----------------------
85% of the Employees identified on the list referred to in Schedule 11.1 list,
subject to each such Employee's satisfactory completion of Buyer's employment
application process, including any reasonable screening processes and
procedures. Buyer's obligation to offer employment in accordance with the
preceding sentence shall apply to Employees on short term disability or other
leave of absence only if such Employees return to active work within three
months of the Closing Date; provided, further, that Buyer shall have no
liability for any sick pay, disability pay or benefits with respect to any such
Employee unless and until such Employee is actively at work for Buyer. Without
Buyer's prior written consent, Seller Parties shall not solicit the employment
of any Employees identified on the list referred to in Schedule 11.1. At
Closing, Buyer shall deliver to Seller a list of Employees who will not be
offered employment by Buyer. Except as to employees covered under employment
contracts identified on Schedule 3.1.10, all offers of employment shall be on an
"at-will" employment basis.
11.2 Terms of Employment. The employment of Transferred Employees by
---------------------
the Buyer shall be upon the following terms and conditions:
11.2.1 Compensation. Buyer shall pay Transferred Employees a base
------------
rate of pay equal to the base rate payable by Seller on the Closing Date.
11.2.2 Vacation Program. Buyer shall recognize service of
-----------------
Transferred Employees as recognized by Seller for future vacation entitlement
and accruals under Buyer's vacation plans.
11.2.3. Severance Pay. Transferred Employees who are
--------------
involuntarily terminated without cause by Buyer within three months of the
Closing Date shall receive severance pay in accordance with Seller's severance
plan as it existed as of the Closing Date. Transferred Employees who are
involuntarily terminated without cause by Buyer at any time after three months
from the Closing Date shall be entitled to severance pay in accordance with
Buyer's then current severance plan.
11.2.4 Benefit Plans. Subject to the approval of Buyer's
--------------
insurance carriers (including stop-loss carriers), which Buyer will use
reasonable efforts to obtain:
(A) Transferred Employees and their dependents who are
participating in a group health plan maintained by Seller immediately
before the Closing Date shall be eligible to participate in a group health
plan maintained by Buyer immediately after the Closing Date, without regard
to any waiting period or preexisting condition exclusion;
(B) Where coverage for dependents of Transferred Employees is
available under Buyer's health and life plans, such coverage shall be
effective as of the same date as the Transferred Employee's coverage
becomes effective.
(C) The Buyer's health plans shall recognize Transferred
Employees' payments toward the annual deductible for Seller's health plans
as though they had been made under the Buyer's plan for the plan year in
which the Transferred Employee became an employee of Buyer.
11.2.5 Service Credit. Except as specifically set out herein,
---------------
Transferred Employees' service with Seller shall be recognized for eligibility
and vesting for the purposes of all of Buyer's benefit and pension plans and
employment policies to the same extent as service with Buyer would be
recognized, subject to any applicable Code provision or other law or regulation
prohibiting or limiting the extension of such credit.
11.3 No Third Party Rights. Nothing contained herein shall (i) confer
----------------------
upon any former, current or future employee of Seller or Buyer or any legal
representative or beneficiary thereof any rights or remedies, including, without
limitation, any right to employment or continued employment of any nature, for
any specified period, (ii) cause the employment status of any former, present or
future employee of Buyer to be other than terminable at will, or (iii) be
construed to limit Buyer's right to amend, revise, suspend, or terminate any
benefit plan or program at any time.
11.4 Employee Notifications. Prior to the Closing Date, Seller shall
-----------------------
provide timely written notice of the transactions contemplated in this Agreement
to the affected Employees, and any other third parties as may be required by
applicable laws, including without limitation the National Labor Relations Act
and the Worker Adjustment and Retraining Notification Act or similar state law,
and as may be required under the terms of any applicable collective bargaining
agreements, arbitration awards, consent decrees, settlement agreements,
injunctions or court orders.
11.5 Former Employees; Transferred Employees. Seller shall be solely
-----------------------------------------
responsible for, and shall indemnify, defend and hold Buyer harmless from and
against, any Claim made by or on behalf of any retiree or former employee of the
Business, or with respect to any Employee who does not become a Transferred
Employee, or with respect to any spouse or dependent of any such person, or with
respect to a Transferred Employee arising out of acts or omissions by Seller
occurring prior to Closing. Buyer shall be solely responsible for, and shall
indemnify, defend and hold Seller harmless from and against, any Claim made by
or on behalf of any Transferred Employee or with respect to any spouse or
dependent of any such person arising out of Buyer's acts or omissions subsequent
to Closing including, without limitation, those made under Section 11.2. The
parties agree that Buyer shall be liable for any continuation coverage
(including any penalties, excise taxes or interest resulting from the failure to
provide continuation coverage) required by Section 4980B of the Code due to
qualifying events which occur on or after the Closing with respect to any
Transferred Employee and such person's spouse and dependents.
ARTICLE 12. MISCELLANEOUS
12.1 Notices. Any notice provided or permitted to be given under this
-------
Agreement (including any request for consent or approval, or response thereto)
shall be in writing, and may be served by personal delivery, by telecopier or by
Federal Express or another reputable overnight courier service, addressed to the
party to be notified. If there is any dispute regarding the actual receipt of
notice, the party giving such notice shall bear the burden of providing
reasonably satisfactory evidence of such delivery or receipt. For the purpose
of the foregoing, electronic confirmation of complete facsimile transmission
shall be satisfactory evidence of receipt of telecopy notice. Notices shall be
deemed to have been given and received upon receipt at the addresses specified
below. For purposes of notice, the addresses of the parties shall be as
follows:
If to Buyer: National-Oilwell, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: National-Oilwell, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller Parties: Elmagco, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Boots & ▇▇▇▇▇ International Well Control, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Thompson, Knight, ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Either Buyer or Seller may specify as its proper address any other address
within the continental United States by giving notice to the other party, in the
manner provided in this Section, at least three business days prior to the
Closing Date of such change of address.
12.2 Assignment. No party may assign any rights or obligations under
----------
this Agreement prior to Closing without the prior written consent of the other
party, which consent may be withheld in the sole discretion of the other party..
Notwithstanding the foregoing, Buyer may assign its rights and obligations
hereunder in whole but not in part to any other Person which is a wholly owned
direct subsidiary if such assignee executes a written assumption agreement in
form and substance reasonably satisfactory to Seller. No assignment by any
party, with or without consent, whether before or after Closing, shall in any
way release such party from any obligations hereunder.
12.3 Further Assurances. Seller and Buyer shall take such further
-------------------
reasonable actions and shall execute, acknowledge and deliver all such further
documents that are reasonably necessary or appropriate to consummate the
transactions contemplated hereby.
12.4 Expenses. Whether or not the transactions contemplated by this
--------
Agreement are consummated, and except as otherwise provided herein, each of the
parties hereto shall bear the salaries, fees and expenses (including without
limitation travel, lodging, food and overhead expenses) of their respective
officers, employees, attorneys, accountants and other representatives and agents
incurred in connection with negotiation and performance of this Agreement, and
the consummation of the transactions contemplated hereby.
12.5 Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced under any applicable rule or
law, such provision shall be ineffective only to the extent of such invalidity,
illegality or unenforceability and all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby, taken as a
whole, is not affected thereby in a materially adverse manner with respect to
either party.
12.6 Entire Agreement. This Agreement, documents provided for herein
-----------------
to be delivered at Closing and the Confidentiality Agreement contain the entire
understanding of the parties hereto with respect to the subject matter hereof
and supersede all prior agreements, , including, without limitation the Original
Agreement, understandings, negotiations and discussions among the parties with
respect to such subject matter. The disclosure by a party on one of the
Schedules attached hereto shall be deemed to be disclosure by such party on any
other applicable Schedule required hereby.
12.7 Confidentiality. All information obtained by Buyer about the
---------------
Assets, including, without limitation, the results or findings of any physical,
topographical, geological, environmental, drainage, soil and engineering studies
or inspections of the Assets conducted by Buyer, shall be subject to the terms
and conditions of the Confidentiality Agreement, which shall survive the
execution, performance and termination of this Agreement.
12.8 Construction. Buyer and Seller acknowledge that this Agreement is
------------
the result of negotiation between them and that they have each been represented
by counsel of their own choosing in such negotiations. The provisions of this
Agreement shall be construed and enforced in accordance with their fair meaning
and shall not be strictly construed against the drafter thereof. Except as
otherwise provided herein, no consents or approvals required or requested
hereunder shall be unreasonably withheld, conditioned or delayed.
12.9 Captions. The descriptive headings contained in this Agreement
--------
are for convenience only and shall not control the meaning or construction of
any provision of this Agreement.
12.10 Amendments. This Agreement may be amended, modified,
----------
supplemented, restated or discharged (and provisions hereof may be waived) only
by one or more instruments in writing signed by the party against whom
enforcement of the amendment, modification, supplement, restatement, discharge
or waiver is sought.
12.11 Binding Effect. This Agreement shall be binding on and inure to
---------------
the benefit of the parties hereto and their respective successors and permitted
assigns.
12.12 Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of Texas without regard to
the principles of conflicts of laws thereof.
12.13 Consent to Jurisdiction and Forum Selection. Buyer hereby
------------------------------------------------
irrevocably consents to the exclusive jurisdiction of the courts of the State of
Texas in and for the County of ▇▇▇▇▇▇ and the United States District Court for
the Southern District of Texas in connection with any litigation arising out of
or relating to this Agreement or any of the transactions contemplated thereby.
12.14 Attorneys' Fees. In the event either Buyer or Seller brings any
----------------
suit or other proceeding with respect to the subject matter or enforcement of
this Agreement, the prevailing party (as determined by the court, agency or
other authority before which such suit or proceeding is commenced) shall, in
addition to such other relief as may be awarded, be entitled to recover
reasonable attorneys' fees, expenses and costs of investigation as actually
incurred (including without limitation attorneys' fees, expenses and costs of
investigation incurred in appellate proceedings), and costs incurred in
establishing the right to indemnification, or in any action or participation in,
or in connection with, any case or proceeding under the Bankruptcy Code, 11
United States Code Section 101 et seq., or any successor statute.
12.15 Punitive Damages. In no event shall either party be liable to
-----------------
the other for any exemplary or punitive damages in any dispute between the
parties relating, directly or indirectly, to this Agreement or the transactions
contemplated hereby.
12.16 No Admissions. Neither this Agreement, nor any part hereof
--------------
(including, without limitation, any disclosure on any Exhibit or Schedule
hereto), nor any performance under this Agreement, nor any payment of any amount
pursuant to any provision of this Agreement shall constitute or be construed as
a finding, evidence of, or an admission or acknowledgment of any liability,
fault, or past or present wrongdoing, or violation of any law, rule, regulation,
or policy, by either Seller or Buyer or by their respective officers, directors,
employees, or agents.
12.17 No Third Party Beneficiaries. Nothing expressed or implied in
-------------------------------
this Agreement is intended to confer on any person other than Buyer, Seller and
their successors and permitted assigns any rights or obligations under this
Agreement.
12.18 No Required Notice. Unless otherwise expressly provided herein,
-------------------
neither party shall be obligated to provide the other with notice of
non-performance of an obligation which is required to be performed by a certain
date or within a certain time period, and the failure to give such notice shall
not extend the period for performance thereof.
12.19 Knowledge. References to either parties' "knowledge" or "best
---------
knowledge" or words or phrases of similar import refer to matters actually known
upon reasonable inquiry, as determined by the inquiring party, (i) with respect
to Seller, by the persons identified on Schedule 12.19(A), and (ii) with respect
to Buyer, by the persons identified on Schedule 12.19(B).
[signature page follows]
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
BUYER: NATIONAL-OILWELL, L.P.
by its general partner
NOW Oilfield Services, Inc.
a Delaware corporation
By:___________________________________
Name:_________________________________
Its:__________________________________
SELLER PARTIES: ELMAGCO, INCORPORATED
a Delaware corporation
By:___________________________________
Name:_________________________________
Its:__________________________________
BOOTS & ▇▇▇▇▇ INTERNATIONAL WELL
CONTROL, INC.
By:___________________________________
Name:_________________________________
Title:________________________________