Exhibit 2
PURCHASE AGREEMENT
BY AND AMONG
OILWELL, INC.
(a wholly owned subsidiary of USX Corporation)
NATIONAL SUPPLY COMPANY, INC.
(a wholly owned subsidiary of Armco Inc.)
USX CORPORATION
ARMCO INC.
AND
NOW HOLDINGS, INC.
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Dated as of September 22, 1995
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TABLE OF CONTENTS
ARTICLE I
PURCHASE AND SALE OF THE INTERESTS AND THE SHARES
1.1 Purchase and Sale of the Interests and the Shares.................1
1.2 Consideration.....................................................1
1.3 Closing...........................................................2
1.4 Deliveries by Seller..............................................2
1.5 Deliveries by Buyer...............................................2
ARTICLE II
RELATED MATTERS
2.1 Ancillary Agreement..............................................3
ARTICLE III
REPRESENTATIONS AND WARRANTIESOF PARENTS AND SELLERS
3.1 Organization of Sellers; Authority...............................3
3.2 Title to the Interests and the Shares............................3
3.3 Organization and Qualification of the Company....................4
3.4 Partnership Interests and Shares.................................4
3.5 Equity Interests.................................................4
3.6 No Violation; Consents and Approvals.............................5
3.7 Financial Statements.............................................6
3.8 Absence of Certain Changes or Events.............................6
3.9 Title to Assets.................................................7
3.10 Patents, Trademarks, Trade Names, etc...........................8
3.11 Litigation......................................................9
3.13 Taxes..........................................................12
3.14 Certain Contracts and Arrangements.............................13
3.15 Compliance with Laws, Licenses etc.............................14
3.16 Insurance......................................................15
3.17 Brokers........................................................15
3.18 Customer Accounts Receivable; Inventories......................15
3.19 Labor Matters..................................................15
3.20 Environmental............................... 15
3.21 No Illegal or Improper Transactions............................17
3.22 Product Liability..............................................17
3.23 Miscellaneous Other Information................................18
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization; Authority.........................................18
4.2 No Violation: Consents and Approvals............................18
4.3 Litigation......................................................19
4.4 Acquisition of the Interests and Shares for Investment;
Securities Act..................................................19
4.5 Financing.......................................................19
4.6 Brokers.........................................................20
ARTICLE V
COVENANTS OF THE PARTIES
5.1 Conduct of the Company's Business................................20
5.2 Access to Information; Confidentiality...........................21
5.3 Efforts..........................................................21
5.4 Consents.........................................................22
5.5 Government Notification..........................................22
5.6 Public Announcements.............................................22
5.7 Supplemental Disclosure..........................................22
5.8 Access to Books and Records Following the Closing................22
5.9 No Other Bids....................................................23
5.10 No Competition...................................................23
5.11 Agreement Concerning Employees...................................24
5.12 Potential Acquisition............................................24
5.13 No Recording.....................................................25
5.14 Financing........................................................25
5.15 Environmental Study..............................................25
5.16 Facility Questionnaire...........................................25
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Tax Matters......................................................25
ARTICLE VII
CONDITIONS TO OBLIGATIONSOF SELLERS AND PARENTS
7.1 Conditions.......................................................29
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
8.1 Conditions.......................................................30
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination...................................................32
9.2 Procedure and Effect of Termination...........................32
9.3 Amendment, Modification and Waiver............................33
ARTICLE X
FEES AND EXPENSES; SURVIVAL OFREPRESENTATIONS; INDEMNIFICATION
10.1 Fees and Expenses.............................................33
10.2 Survival of Representations...................................33
10.3 National Supply Agreement to Indemnify........................33
10.5 Sellers' and Parents' Limitation of Liability.................36
10.6 Buyer's Agreement to Indemnify................................37
10.7 Conditions of Indemnification.................................38
10.8 Parent Guarantee..............................................39
10.9 Matters Disclosed in Disclosure Schedule......................39
ARTICLE XI
MISCELLANEOUS
11.1 Further Assurances............................................40
11.2 Notices.......................................................40
11.3 Entire Agreement..............................................41
11.4 Severability..................................................41
11.5 Binding Effect: Assignment....................................41
11.6 Third-Party Beneficiaries.....................................42
11.7 Counterparts..................................................42
11.8 Interpretation................................................42
11.9 Governing Law.................................................42
11.10 Certain Waivers...............................................42
Exhibits:
A Ancillary Agreement Matters
B Form of Assignment of Interests
C Allocation of Purchase Price
D Form of Buyer's Officer's Certificate
E Matters to be Covered by Opinion of Buyer's Legal Counsel
F Form of Compliance Certificate of Sellers and Parents
G Matters to be Covered by Opinions to be Furnished to Buyer
H Real Properties Owned or Leased Originally Contributed Upon Formation of
National-Oilwell and Currently Held by the Partnership
I Properties for which Title Representation Survives Closing
J Names of Management Equity Investors
K Form of Management Investor Certificate
L Form of Subordinated Promissory Note
No Exhibits listed are filed herewith. The Registrant hereby undertakes
to furnish supplementally to the Commission upon its request therefor
any Exhibits not so filed.
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PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "Agreement") is made and entered into as of
September 22, 1995, by and among OILWELL, INC., a Delaware corporation
("Oilwell") and a wholly owned subsidiary of USX CORPORATION, a Delaware
corporation ("USX"), USX, NATIONAL SUPPLY COMPANY, INC., a Delaware
corporation ("National Supply") and a wholly owned subsidiary of ARMCO INC., a
Ohio corporation ("Armco"), Armco (Oilwell and National Supply are
individually and collectively referred to herein as "Seller" and "Sellers" and
USX and Armco are individually and collectively referred to herein as "Parent"
and "Parents"), and NOW HOLDINGS, INC., a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Buyer desires to purchase from Sellers, and Parents and Sellers
desire to sell to Buyer, all of the partnership interests (the "Interests"),
in National-Oilwell, a Delaware general partnership (the "Company"), and all
of the issued and outstanding capital stock (the "Shares") of National-Oilwell
Pte. Ltd, a Singapore corporation ("NOW Singapore") and National-Oilwell Pty.
Ltd., an Australia corporation ("NOW Australia"), which shares are
beneficially owned by the Company but legally held by Seller, upon the terms
and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants, agreements and conditions contained
herein, and intending to be legally bound hereby, the parties agree as
follows:
ARTICLE I
PURCHASE AND SALE OF THE INTERESTS AND THE SHARES
1.1 Purchase and Sale of the Interests and the Shares. Upon the
terms and subject to the conditions of this Agreement, at the closing provided
for in Section 1.3 hereof (the "Closing"), Sellers shall sell, assign,
transfer and deliver to Buyer and Buyer shall purchase, acquire and accept
from Seller all of the Interests and the Shares.
1.2 Consideration. At the Closing, upon the terms and subject to the
conditions of this Agreement, in consideration of the aforesaid sale,
assignment, transfer and delivery of the Interests and the Shares, Buyer shall
pay and/or deliver to Sellers aggregate consideration (the "Purchase Price")
consisting of $160,000,000 in cash, $83,000,000 of which shall be paid to
Oilwell and $77,000,000 of
which shall be paid to National Supply, and $20,000,000 in aggregate original
principal amount of subordinated notes issued by Buyer in the form attached
hereto as Exhibit L, to be split equally into two separate notes in the
original principal amount of $10,000,000 per note, one of which will be issued
to each Seller (such notes being herein collectively referred to as the "Buyer
Notes" and singularly as a "Buyer Note"). The Purchase Price shall be
allocated in accordance with Section 6.1(i) and Exhibit C.
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1.3 Closing. Subject to the termination provision of Article IX, the
Closing of the transactions contemplated by this Agreement shall take place at
the offices of Vinson & Elkins L.L.P., 1001 Fannin, Houston, Texas, or at such
other location as Buyer shall determine and notify Sellers, at 10 a.m. local
time on the date that is five business days after the date of the fulfillment
of all of the conditions to Closing set forth in Article VII and Article VIII
hereof, or such other date and time as shall be agreed upon in writing by the
parties hereto. The date on which the Closing actually occurs is referred to
herein as the "Closing Date."
1.4 Deliveries by Seller. At the Closing, Seller shall deliver or
cause to be delivered to Buyer (unless delivered previously) the following:
(a) an assignment of the Interests, duly executed by each of the
Sellers and in substantially the form of Exhibit B hereto, and any other
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documents that are necessary to transfer title to the Interests to Buyer;
(b) stock certificates representing the Shares, duly endorsed or
accompanied by stock powers duly executed in blank or duly executed
instruments of transfer, and any other documents that are necessary to
transfer title to the Shares to Buyer;
(c) the compliance certificate referred to in Subsection 8.1(c)
hereof;
(d) the opinions of counsel to Sellers referred to in
Subsection 8.1(d) hereof; and
(e) all other documents, certificates, instruments or writings
required to be delivered by Sellers at or prior to the Closing pursuant to
this Agreement or otherwise reasonably requested by Buyer in connection
herewith.
1.5 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver or cause to be
delivered to Sellers (unless delivered previously) the following:
(a) the cash portion of the Purchase Price payable to the Sellers as
provided in Section 1.2, by wire transfer of immediately available funds in
United States dollars, to respective bank accounts designated by each Seller
not less than two days prior to the Closing;
(b) the Buyer Notes;
(c) the officer's certificate referred to in Subsection 7.1(c) hereof;
(d) the opinion of counsel to Buyer referred to in Subsection 7.1(d)
hereof;
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(e) Releases of Sellers from any obligations under that certain
Credit Agreement dated February 28, 1995, among the Company, Citibank USA,
Inc. and BA Business Credit, Inc. (the "Existing Credit Agreement"); and
(f) all other documents, certificates, instruments or writings
required to be delivered by Buyer at or prior to the Closing pursuant to this
Agreement or otherwise reasonably requested by Sellers in connection herewith.
ARTICLE II
RELATED MATTERS
2.1 Ancillary Agreement. At the Closing, Sellers and Buyer shall
enter into an agreement concerning the matters set forth in Exhibit A as the
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Sellers and Buyer shall mutually agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENTS AND SELLERS
Parents and Sellers, jointly and severally, represent and warrant to
Buyer as set forth in this Article III; provided, however, that with respect
to any representations and warranties contained in this Article III that refer
to matters relating to an individual Parent or Seller (i.e., by use of the
singular term "Parent" or "Seller"), each individual Parent or Seller, as the
case may be, shall be deemed to have made the portion of such representation
and warranty that covers matters relating to it on a several (and not joint
and several) basis and shall have no liability with respect to the portion of
such representation and warranty that covers matters relating to any other
Parent or Seller, as the case may be.
3.1 Organization of Sellers; Authority. USX and each Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Armco is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio. Each
Parent and Seller has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of each Parent and Seller. This
Agreement has been duly executed and delivered by each Parent and Seller and
constitutes a valid and binding obligation of each Parent and Seller,
enforceable against each Parent and Seller in accordance with its terms.
3.2 Title to the Interests and the Shares. Except as set forth in
Section 3.2 of the disclosure schedule being delivered by Sellers to Buyer
concurrently herewith (the "Disclosure Schedule"), each
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Seller represents that (i) it has good and valid title to the portion of the
Interests and the Shares reflected as being owned by such Seller in
Section 3.2 of the Disclosure Schedule free and clear of all liens,
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encumbrances, options, claims, security interests, charges, voting trusts or
partners' agreements, equities, conditional sale or title retention
agreements, restrictions or other burdens and (ii) at Closing, valid title to
such portion of the Interests and the Shares, free and clear of all such
liens, encumbrances, options, claims, security interests, voting trusts or
partners' agreements, equities, conditional sale or title retention
agreements, restrictions or other burdens (including those set forth in
Section 3.2 of the Disclosure Schedule), shall pass to Buyer.
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3.3 Organization and Qualification of the Company. The Company is a
general partnership duly formed and validly existing under the laws of the
State of Delaware and has all requisite power and authority to own, lease and
operate its properties and to conduct its business as it is now being
conducted. The Company is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary.
The Company has heretofore delivered to Buyer complete and correct copies
of the partnership agreement of the Company, as currently in effect.
3.4 Partnership Interests and Shares. Sellers are the holders of all
of the partnership interests in the Company and all of the issued and
outstanding shares of capital stock or other equity interests of NOW Singapore
and NOW Australia. Other than the partnership interests owned by the Sellers,
there are no other interests in the Company granting the holder thereof the
right to receive distributions of cash or property, or allocations of income,
gain, loss or deduction. Such Interests and Shares have not been issued in
violation of, and except for statutory preemption rights are not subject to,
any preemptive or subscription rights. Except for the matters that are the
subject of the waivers referenced in Section 11.10 hereof, there are no
outstanding warrants, options, agreements, convertible or exchangeable
securities or other commitments pursuant to which the Company or a Parent or
Seller is or may become obligated to issue, sell, purchase, return or redeem
any partnership interests in the Company or any shares of capital stock of NOW
Singapore or NOW Australia.
3.5 Equity Interests. (a) Except as set forth in Section 3.5 of the
Disclosure Schedule and except for immaterial investments in less than five
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percent (5%) of the outstanding stock or other equity interests of other
entities, the Company does not own, directly or indirectly, any capital stock
or other equity interests of any corporation, partnership, joint venture or
other entity. None of such capital stock and equity interests has been issued
in violation of, and except for statutory preemption rights is not subject to,
any preemptive or subscription rights. There are no outstanding warrants,
options,
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agreements, convertible or exchangeable securities or other commitments to
which any of such entities is or may become obligated to issue, sell,
purchase, return or redeem any of such capital stock or equity interests.
Except as set forth in Section 3.5 of the Disclosure Schedule, the Company is
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the owner of all of the issued and outstanding capital stock or other equity
interests of each of the Subsidiaries.
(b) Each of the Subsidiaries (as such term is defined below) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization or incorporation, has all requisite power and
authority to own, lease and operate its properties and to conduct its business
as it is now being conducted, and is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification necessary. The Company has heretofore delivered to Buyer
complete and correct copies of the constituent organizational documents, as
currently in effect, for each of the entities described in Section 3.5 of the
Disclosure Schedule (excluding those entities listed in Section 3.5 of the
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Disclosure Schedule that have an asterisk (*) adjacent to their names), and
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such entities, together with NOW Australia and NOW Singapore, but excluding
such entities marked with an asterisk (*) in Section 3.5 of the Disclosure
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Schedule, are referred to herein individually and collectively as "Subsidiary"
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or "Subsidiaries."
3.6 No Violation; Consents and Approvals. Except as set forth in
Section 3.6 of the Disclosure Schedule, to the knowledge of the Sellers, the
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Parents, the Company or any Subsidiary, the execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, conflict with, result in
any violation of or default of, or require any consent or approval of, or
notice to, any private nongovernmental party under, (a) any provision of the
charter or bylaws, or other constituent organizational documents, of any
Seller or the Company or any of the Subsidiaries, (b) any judgment, order or
decree, or statute, law, ordinance, rule or regulation applicable to any
Parent, Seller, the Company, or any Subsidiary or the property or assets of
any Parent, Seller, the Company, or any Subsidiary or (c) any Material
Contracts (as such term is defined in Section 3.14). No consent, approval,
order or authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental entity,
authority or instrumentality, domestic or foreign, is required to be obtained
or made by or with respect to any Parent, Seller, the Company, or any
Subsidiary or their affiliates in connection with the execution and delivery
of this Agreement or the consummation by either Seller of the transactions
contemplated hereby, other than (i) compliance with and filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), if applicable, (ii) compliance with and filings under Section 13(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(iii) com-
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pliance with and filings under federal or state environmental, tax, employment
or workers compensation statutes, if applicable, (iv) those which may be
required solely by reason of the participation of Buyer or any party other
than Parents, Sellers, the Company or the Subsidiaries in the transactions
contemplated hereby, and (v) foreign ownership, competition or title
registration statutes of Australia, Canada, Singapore, United Kingdom,
Venezuela, Malaysia, Brazil and Thailand, if applicable.
3.7 Financial Statements. Section 3.7 of the Disclosure Schedule
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sets forth the unaudited balance sheet of the Company as of June 30, 1995 (the
"Balance Sheet"), and the unaudited consolidated operating statements of the
Company and the Subsidiaries for the six-month period ended June 30, 1995, and
the audited consolidated balance sheets and consolidated statements of
operations of the Company and the Subsidiaries as of, and for the three fiscal
years ended, December 31, 1994, December 31, 1993 and December 31, 1992
reported on by Ernst & Young LLP (together, the "Financial Statements"). The
Financial Statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") consistently applied and fairly present the
financial condition and the results of operations of the Company and the
Subsidiaries as at the dates and for the periods indicated. During the period
covered by the Financial Statements, there have been no changes in the
accounting methods, principles or practices followed by the Company or the
Subsidiaries or the depreciation or amortization policies or rates of the
Company or the Subsidiaries, except as disclosed in the notes to the Financial
Statements.
3.8 Absence of Certain Changes or Events. Except as set forth in
Section 3.8 of the Disclosure Schedule and as otherwise contemplated by this
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Agreement, during the period from July 1, 1995 to the date hereof, there has
not been:
(a) to the knowledge of Sellers, Parents, the Company or any
Subsidiary, any adverse changes or, any threatened adverse changes in the
consolidated financial condition of the Company and the Subsidiaries, or in
the properties, assets, liabilities, business or prospects of the Company and
the Subsidiaries, which exceed, or which reasonably could be expected to
exceed, in the aggregate $1,000,000, except normal and usual changes in the
ordinary course of business of the Company and the Subsidiaries consistent
with past practices;
(b) any amendment or waiver of the terms of the Partnership Agreement
of the Company;
(c) any approval by the Management Committee of the Company of any of
the actions specified by Section 4.4 of the Partnership Agreement of the
Company;
(d) any action by either or both Partners as opposed to actions by
the Company through its officers, employees and agents on behalf of the
Company;
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(e) any amendment of the constituent organizational documents of NOW
Australia or NOW Singapore;
(f) any (i) incurrence or commitment to any capital expenditures,
obligations or liabilities in connection therewith other than capital
expenditures, obligations or liabilities that were included in the annual
capital budget approved by the Management Committee of the Company or if not
so included that do not exceed in the aggregate $200,000; or (ii) acquisitions
by merger, consolidation or purchase of assets of any person;
(g) to the knowledge of Sellers, Parents, the Company or any
Subsidiary, any physical damage as a result of fire, flood, explosion or other
casualty, destruction or loss (whether or not covered by insurance) which
adversely affects properties or assets of the Company and the Subsidiaries
having an aggregate book value or market value in excess of $500,000; or
(h) any declaration or payment of any dividends or other distributions with
respect to the partnership interests in the Company or the Shares.
3.9 Title to Assets. (a) Except with respect to the Real Property
Interests (title to which is covered by subparagraph (b) immediately below),
the Company and the Subsidiaries have good and valid title to all assets
reflected on the Balance Sheet or thereafter acquired (except those since sold
or otherwise disposed of in the ordinary course of business and accounts,
bills and notes receivable subsequently collected), and all of their other
assets, tangible and intangible, in each case free and clear of all mortgages,
liens, security interests or encumbrances, other than (i) mechanics',
carriers', workmen's, repairmen's or other like liens arising or incurred in
the ordinary course of business, (ii) liens for taxes, assessments and other
governmental charges which are not due and payable or which may hereafter be
paid without penalty or which are being contested in good faith by appropriate
proceedings and (iii) other imperfections of title or encumbrances, if any,
that do not materially impair the use of the assets to which they relate in
the businesses of the Company and the Subsidiaries as presently conducted (the
mortgages, liens, security interests and encumbrances described in clauses
(i), (ii) and (iii) above are hereinafter referred to collectively as
"Permitted Liens").
(b) Section 3.9(b) of the Disclosure Schedule sets forth a complete
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list of all real property owned in fee by the Company or a Subsidiary and all
real property leasehold interests owned by the Company or a Subsidiary
(collectively, the "Real Property Interests"). Except as set forth in
Section 3.9(b) of the Disclosure Schedule, the Company and the Subsidiaries
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have (i) good and indefeasible title to and the unrestricted right to sell,
the Real Property Interests, in each case free and clear of all mortgages,
liens, security interests, charges, easements, covenants, rights-of-way and
other
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encumbrances or restrictions of any nature whatsoever ("Encumbrances"), except
(A) Permitted Liens, (B) all conditions that a physical inspection or survey
would show, (C) all Encumbrances of record, (D) all Encumbrances for public
utilities to provide service to facilities located on such property or to
provide service to adjacent property, whether or not of record, (E) all
farming or grazing agreements, whether or not of record, (F) all zoning or
other governmentally-imposed Encumbrances and (G) unrecorded easements,
covenants, rights of way or other restrictions, none of which unrecorded items
materially impair the use of the property to which they relate in the
businesses of the Company and the Subsidiaries as presently conducted.
(c) Except as set forth in Section 3.9(c) of the Disclosure Schedule,
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to the knowledge of the Sellers, the Parents, the Company and the
Subsidiaries, the material buildings, facilities, machinery, equipment and
tools currently used in the ordinary course of business of the Company and the
Subsidiaries have been maintained in accordance with the Company's and the
Subsidiaries' customary maintenance practices and are in a state of repair
(normal wear and tear excepted) which the Company believes to be adequate for
the normal use of such facilities in the ordinary course of their businesses.
The Company and the Subsidiaries have all of the machinery, equipment and
tools which are necessary for the conduct of their businesses as they are now
being conducted.
(d) The property and assets owned and leased by the Company and the
Subsidiaries constitute all of the tangible and intangible property and assets
used in the business operations of the Company and the Subsidiaries as
conducted as of the date of this Agreement. The Company and the Subsidiaries
do not own or lease any property or asset (i) which is not used or held for
use in their businesses and/or is used by any other person or (ii) which is
used in their businesses but use of which is made available to other persons
for matters unrelated to the businesses of the Company and the Subsidiaries.
3.10 Patents, Trademarks, Trade Names, etc. (a) Section 3.10(a) of
the Disclosure Schedule sets forth a complete list of all patents, registered
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trademarks, trade names, service marks, assumed names, copyrights and all
applications therefor and all invention disclosures, title and goodwill of
"National-Oilwell" (collectively, the "Intellectual Property") owned, filed or
licensed by the Company and the Subsidiaries and used in or held for use in
the conduct of the businesses of the Company and the Subsidiaries and, with
respect to patents and registered trademarks, all jurisdictions in which such
trademarks are registered. To the knowledge of the Sellers, the Parents, the
Company or any Subsidiary, the Company and the Subsidiaries are not infringing
and have not infringed on any patent, trademark, service mark, trade name or
copyright and have not misappropriated or improperly disclosed any trade
secret or confidential information.
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(b) Except as set forth in Section 3.10(b) of the Disclosure
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Schedule, the Company and the Subsidiaries have the full right to use the
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Intellectual Property, and all trade secrets and confidential information used
by the Company and the Subsidiaries, in the conduct of their businesses, as
currently conducted, and no claims have been asserted of which the Company or
the Subsidiaries have been given notice by any person with respect to the use
by the Company or the Subsidiaries of the Intellectual Property or any trade
secrets or confidential information used by the Company or any Subsidiary.
3.11 Litigation. Except as set forth in Section 3.11 of the
Disclosure Schedule, there is no claim, action, suit, investigation or
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proceeding pending or to the knowledge of the Company, the Subsidiaries,
Sellers or Parents threatened against or affecting the Company or the
Subsidiaries before any court, administrative body, tribunal, administrative
board or panel, federal, state, foreign or local. Neither the Company nor any
Subsidiary is aware of any default with respect to any judgment, order, writ,
injunction, decree, award, rule or regulation of any court, arbitrator or
governmental agency or instrumentality applicable to them, or any event that
has occurred which with notice or lapse of time or both would constitute such
a default.
3.12 Employee Benefit Matters. (a) Section 3.12(a) of the
Disclosure Schedule sets forth a complete list of each of the following which
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is sponsored, maintained or contributed to by the Company, the Subsidiaries,
or any Seller for the benefit of the employees of the Company and the
Subsidiaries as of the Closing Date:
(i) each "employee benefit plan," as such term is defined in
Section 3(3) of the Employee Retirement Security Act of 1974, as amended
("ERISA"), including, but not limited to, employee benefit plans, such as
foreign plans, which are not subject to the provisions of ERISA ("Plan"); and
(ii) each personnel policy, stock option plan, collective
bargaining agreement, bonus plan or arrangement, incentive award plan or
arrangement, vacation policy, severance pay plan, policy or agreement,
deferred compensation agreement or arrangement, executive compensation or
supplemental income arrangement, executive perquisite arrangement, consulting
agreement, employment agreement and each other employee benefit plan,
agreement, arrangement, program, practice or understanding which is not
described in Section 3.12(a)(i) ("Benefit Program or Agreement").
(b) True, correct and complete copies of each of the Plans, and
related trusts, if applicable, including all amendments thereto, have been
furnished to Buyer. There has also been furnished to Buyer, with respect to
each Plan required to file such report and description, the most recent report
on
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Form 5500 and the summary plan description. True, correct and complete copies
or descriptions of all Benefit Programs and Agreements have also been
furnished to Buyer.
(c) Except as otherwise set forth in Section 3.12(c) of the
Disclosure Schedule,
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(i) neither the Company nor the Subsidiaries contribute to or
have an obligation to contribute to, and have not at any time within six years
prior to the Closing Date contributed to or had an obligation to contribute
to, a multi-employer plan within the meaning of Section 3(37) of ERISA;
(ii) the Company, the Subsidiaries and each Seller have
substantially performed all obligations, whether arising by operation of law
or by contract, required to be performed by them in connection with the Plans
and the Benefit Programs and Agreements, and, to the knowledge of the Company,
the Subsidiaries, each Seller and each Parent, there have been no defaults or
violations by any other party to the Plans or Benefit Programs and Agreements;
(iii) all reports and disclosures relating to the Plans required
to be filed with or furnished to governmental agencies, Plan participants or
Plan beneficiaries have been filed or furnished in accordance with applicable
law in a timely manner, and each Plan and each Benefit Program or Agreement
has been administered in substantial compliance with all laws applicable
thereto and its governing documents;
(iv) each of the Plans intended to be qualified under
Section 401 of the Code has received a favorable determination letter from the
IRS regarding such qualified status and has not, since receipt of the most
recent favorable determination letter, been amended or, to the knowledge of
the Company, each Seller and each Parent, operated in a way which would
adversely affect such qualified status;
(v) there are no actions, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of the Company, the
Subsidiaries, each Seller and each Parent, threatened against, or with respect
to, any of the Plans or Benefit Programs and Agreements or their assets;
(vi) all contributions required to be made to the Plans pursuant
to their terms and provisions have been made timely;
(vii) as to any Plan subject to Title IV of ERISA, there has
been no event or condition which presents the risk of Plan termination, no
accumulated funding deficiency, whether or not waived, within the meaning of
Section 302 of ERISA or Section 412 of the Code has been incurred, no
reportable event within the meaning of Section 4043 of ERISA (for which the
disclosure requirements or the penalties under applicable regulatory authority
promulgated by
-10-
the Pension Benefit Guaranty Corporation ("PBGC") have not been waived) has
occurred, no notice of intent to terminate the Plan has been given under
Section 4041 of ERISA, no proceeding has been instituted under Section 4042 of
ERISA to terminate the Plan, there has been no termination or partial
termination of the Plan within the meaning of Section 411(d)(3) of the Code,
no liability to the PBGC has been incurred, and the assets of the Plan equal
or exceed the actuarial present value of the benefit liabilities, within the
meaning of Section 4041 of ERISA, under the Plan, based upon reasonable
actuarial assumptions and the asset valuation principles established by the
PBGC;
(viii) none of the Plans, nor any trust created thereunder or
with respect thereto, has engaged in any "prohibited transaction" or "party-
in-interest transaction" as such terms are defined in section 4975 of the Code
and Section 406 of ERISA which would subject the Company or any Subsidiary to
a tax or penalty on prohibited transactions or party-in-interest transactions
pursuant to section 4975 of the Code or Section 502(i) of ERISA and no act,
omission or transaction has occurred which would result in imposition on the
Company or any Subsidiary of breach of fiduciary duty liability damages under
Section 409 of ERISA or a civil penalty assessed pursuant to Section 502(c) or
(l) of ERISA;
(ix) to the knowledge of the Company, the Subsidiaries, each
Seller and each Parent, there is no matter pending (other than routine
qualification determination filings) with respect to any of the Plans before
the IRS, the Department of Labor or the PBGC;
(x) each trust funding a Plan, which trust is intended to be
exempt from federal income taxation pursuant to section 501(c)(9) of the Code,
has received a favorable determination letter from the IRS regarding such
exempt status and has not, since receipt of the most recent favorable
determination letter, been amended or, to the knowledge of the Company, the
Subsidiaries, each Seller and each Parent, operated in a way which would
adversely affect such exempt status;
(xi) with respect to any employee benefit plan, within the
meaning of Section 3(3) of ERISA, which is not set forth in Section 3.12(a) of
the Disclosure Schedule but which is sponsored, maintained or contributed to,
-------------------
or has been sponsored, maintained or contributed to within six years prior to
the Closing Date, by the Company or by any corporation, trade business or
entity under common control with the Company, within the meaning of
section 415(b), (c) or (m) of the Code or Section 4001 of ERISA, (A) no
withdrawal liability, within the meaning of Section 4201 of ERISA, has been
incurred, which withdrawal liability has not been satisfied, (B) no liability
to the PBGC has been incurred which liability has not been satisfied, (C) no
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accumulated funding deficiency, whether or not waived, within the meaning of
Section 302 of ERISA or section 412 of the Code has been incurred, and (D) all
contributions (including installments) to such plan required by Section 302 of
ERISA and section 412 of the Code have been timely made;
(xii) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not (A) require the
Company or any Subsidiary to make a larger contribution to, or pay greater
benefits under, any Plan, Benefit Program or Agreement than it otherwise would
or (B) create or give rise to any additional vested rights or service credits
under any Plan, Benefit Program or Agreement, except as otherwise specifically
provided herein;
(xiii) each nongovernmental Plan outside of the United States
("Foreign Plan") has no unfunded liabilities, and each Foreign Plan covers
only employees or former employees of the Subsidiaries; and
(d) Section 3.12(d) of the Disclosure Schedule. sets forth a complete
-------------------
list of employee benefit plans, arrangements or programs sponsored, maintained
or contributed to by any Parent for the benefit of the employees of the
Company or the Subsidiaries as of the Closing Date.
(e) In connection with the consummation of the transactions
contemplated by this Agreement, no payments have been or will be made under
the Plans, Benefit Programs and Agreements which, in the aggregate, would
result in imposition of the sanctions imposed under sections 280G and 4999 of
the Code.
(f) Except as otherwise set forth in Section 3.12(f) of the
Disclosure Schedule, each Plan which is an "employee welfare benefit plan," as
- -------------------
such term is defined in Section 3(1) of ERISA, reserves the right to be
unilaterally amended or terminated in its entirety respecting benefits
accrued thereunder on or after such amendment or termination.
3.13 Taxes. (a) The Company is a partnership for federal income tax
purposes within the meaning of section 7701(a)(2) of the Internal Revenue Code
of 1986, as amended (the "Code") and applicable Treasury Regulations and is
not an association taxable as a corporation within the meaning of
section 7701(a)(3) of the Code and applicable Treasury Regulations.
(b) All items of income, gain, loss, deduction and credit or any
other item of the Company or any Subsidiary ("Tax Items") required by law to
be included in any return and report of or with respect to any Tax ("Tax
Return") of the Sellers or Parents that is required to be filed on or before
the Closing Date have been or will be included in such Tax Returns and all
Taxes payable thereunder have been or will be paid by the Sellers or Parents.
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(c) Except as set forth in Section 3.13(c) of the Disclosure
----------
Schedule, all Tax sharing agreements or similar arrangements with respect to
- --------
or involving the Company or any Subsidiary have been or will be terminated
prior to the Closing Date, and after the Closing Date the Company and the
Subsidiaries shall not have any obligation under any such agreement for any
past, current or future period;
(d) Except as set forth in Section 3.13(d) of the Disclosure
----------
Schedule, there is no claim against the Company or any Subsidiary for any
- --------
Taxes, and no assessment, deficiency or adjustment has been asserted or
proposed with respect to any Tax Return of the Company or any Subsidiary. None
of the property of the Company or any Subsidiary is subject to any lien for
any Tax.
(e) Except as set forth in Section 3.13(e) of the Disclosure
----------
Schedule, neither the Company nor any Subsidiary is obligated to take any
- --------
action or refrain from taking any action in connection with any agreement with
any Taxing Authority involving an abatement of any Tax.
(f) Except as set forth in Section 3.13(f) of the Disclosure
----------
Schedule, there is not in force any extension of time with respect to the due
- --------
date for the filing of any Tax Return of the Company or any Subsidiary or any
waiver or agreement for any extension of time for the assessment or payment of
any Tax of, or with respect to, the Company or any Subsidiary or any Tax
Items.
(g) For purposes of this Agreement, "Tax" or "Taxes" shall mean any
tax of any kind, including, without limitation, all income, property, sales,
use, occupation, franchise, excise, value added, employees' income withholding
and social security taxes, and related to such taxes, charges, fees, levies,
penalties or other assessments, imposed by the United States or by any foreign
country or by any state, municipality, subdivision or instrumentality of the
United States or of any foreign country, or by any other taxing authority.
3.14 Certain Contracts and Arrangements. Except as set forth in
Section 3.14 of the Disclosure Schedule and except for purchase contracts and
-------------------
orders for inventory in the ordinary course of business, neither the Company
nor any Subsidiary is, as of the date of this Agreement, a party to or bound
by any of the following (collectively, the "Material Contracts"):
(a) employment agreement or severance agreement that is not
terminable at will by the Company or any Subsidiary;
(b) collective bargaining agreement or other contract with any
labor union;
(c) covenant not to compete (other than pursuant to any lease,
reciprocal easement agreement, development agreement, operating agreement or
construction agreement);
(d) agreement or contract with any Seller or Parent or any of
their respective affiliates (other than the Company NOW Singapore or NOW
Australia) or any officer, director or employee of the Company, any
Subsidiary, any Seller or any Parent or any of such affiliates (other than
employment and severance agreements covered by clause (a) above);
(e) agreement or contract under which the Company or any
Subsidiary has borrowed or loaned money, or any note, bond, indenture or other
evidence of indebtedness or any guarantee of indebtedness, in each case
relating to amounts in excess of $100,000 (other than endorsements for the
purpose of collection in the ordinary course of business);
(f) agreements or contracts under which the Company and the
Subsidiaries have, in the aggregate, sold or agreed to sell properties and
assets having an aggregate net book value of more than $250,000; or
(g) other agreement, contract, lease, license, commitment or
instrument to which the Company or any Subsidiary is a party which
(i) involves sales of products of the Company and its Subsidiaries, or
purchases by the Company and the Subsidiaries of products and services, in
excess of $100,000, (ii) involves future expenditures in excess of $200,000,
and is not terminable by the Company or the Subsidiary on 30 days' or fewer
notice without penalty, or (iii) is otherwise material to the business,
assets, earnings, properties, operations or condition, financial or otherwise,
of the Company and the Subsidiaries taken as a whole.
Except as set forth in Section 3.14 of the Disclosure Schedule, to the
-------------------
knowledge of Sellers, Parents, the Company or any Subsidiary, neither the
Company nor any Subsidiary is in breach of or in default under any Material
Contract. To the knowledge of the Sellers, Parents, the Company or any
Subsidiary, the other parties to each Material Contract have performed in all
material respects all obligations required to be performed by them to date and
are not in default under or in violation of, and no event has occurred which
with notice, lapse of time or both, would constitute a default thereunder.
3.15 Compliance with Laws, Licenses. To the knowledge of Sellers,
Parents, the Company or any Subsidiary, the businesses of the Company and the
Subsidiaries are being operated in compliance in all material respects with
all applicable laws, statutes, ordinances, rules, regulations and orders
(collectively, "laws") of all governmental entities, authorities and
instrumentalities, except for (a) ERISA and other laws applicable to the
Plans, which are addressed in Section 3.12 hereof; (b) laws regarding the
payment of Taxes, which are addressed in Section 3.13 hereof; (c) laws
regarding employment and employment practices, which are addressed in
Section 3.19 hereof; and (d) Environmental Laws, which are addressed in
Section 3.20 hereof. To the knowledge of Sellers, Parents, the Company or any
Subsidiary, the Company and the Subsidiaries have all material permits,
certificates, licenses, approvals and other authorizations ("Permits")
required in connection with the
-14-
current operation of their businesses under applicable laws (other than those
referred to in clauses (a)-(d) above).
3.16 Insurance. The Company and the Subsidiaries maintain policies
of fire and casualty, liability and other forms of insurance in such amounts,
with such deductibles and against such risks and losses as are listed in
Section 3.16 of the Disclosure Schedule.
-------------------
3.17 Brokers. Neither the Company, nor any Subsidiary, Seller or
Parent, has retained any broker, finder or financial advisor or other person
who is or will be entitled to any brokerage fees, commissions, finders' fees
or financial advisory fees in connection with the transactions contemplated
hereby for which Buyer, the Company or any Subsidiary is or will be liable.
3.18 Customer Accounts Receivable; Inventories. Section 3.18 of the
Disclosure Schedule sets forth certain information with respect to the
- -------------------
accounts receivable and inventories of the Company and the Subsidiaries.
3.19 Labor Matters. Section 3.19 of the Disclosure Schedule sets
-------------------
forth by number and employment classification the approximate number of
employees employed by the Company and the Subsidiaries as of the date of this
Agreement, and, except as set forth therein, none of said employees are
subject to union or collective bargaining agreements with the Company or any
Subsidiary. Except as set forth in Section 3.19 of the Disclosure Schedule,
-------------------
(a) to the knowledge of Sellers, Parents, the Company or any Subsidiary, the
Company and the Subsidiaries are in compliance with all applicable laws
respecting employment and employment practices, (b) there is no unfair labor
practice charge or complaint against the Company or any Subsidiary pending or,
to the knowledge of the Company, the Subsidiaries, Sellers or Parents,
threatened, before the National Labor Relations Board or other governmental
agency nor is there any grievance nor any arbitration proceeding arising out
of or under collective bargaining agreements pending or, to the knowledge of
the Company, the Subsidiaries, Sellers or Parents, threatened, with respect
to the businesses of the Company and the Subsidiaries, (c) there is no labor
strike, slowdown or work stoppage pending or threatened against the Company or
any Subsidiary and (d) there is no charge or complaint pending or threatened
against the Company or any Subsidiary before the Equal Employment Opportunity
Commission or any state, local or foreign agency responsible for the
prevention of unlawful employment practices. Neither the Company nor any
Subsidiary has received notice of the intent of any foreign, federal, state or
local agency responsible for the enforcement of labor or employment laws to
conduct an investigation of or relating to the Company or any Subsidiary, and
no such investigation is in progress. No union is known to the Company to be
organizing or attempting to organize any employees of the Company or any
Subsidiary.
3.20 Environmental. Except as set forth in Section 3.20 of the
Disclosure Schedule:
- -------------------
-15-
(a) Schedule 3.20 of the Disclosure Schedule sets forth a list of all
-------------------
assessments, studies, reports or appraisals ("Environmental Reports")
possessed by the Company, any Subsidiary, Seller or Parent relating to the
environmental condition of any real property currently or formerly owned or
leased by the Company or any Subsidiary (the "Company Property") or relating
to the compliance by the Company or any Subsidiary with any Environmental
Laws.
(b) To the knowledge of Sellers, Parents, the Company or any
Subsidiary, the Company Property and the operations conducted thereon do not
violate in any material respect any Environmental Laws and there are no
conditions existing on or resulting from the operation of any Company Property
that could give rise to any on-site or off-site remedial obligations under any
Environmental Laws.
(c) The Company Property and the operations conducted thereon by the
Company and the Subsidiaries or the operations by any prior owner or operator
of the Company Property, are not subject to any existing, pending or, to the
knowledge of any Seller or Parent, threatened action, suit, investigation,
inquiry or proceeding by or before any Governmental Authority.
(d) All notices, permits, licenses or similar authorizations, if any,
required to be obtained or filed in connection with the current operation or
use of the Company Property, including without limitation treatment, storage,
disposal or release of a hazardous substance or solid waste into the
environment, if any, have been duly obtained or filed, and the Company and the
Subsidiaries are in compliance with the terms and conditions of all such
notices, permits, licenses and similar authorizations.
(e) To the knowledge of Sellers, Parents, the Company or any
Subsidiary, neither the Company nor any Subsidiary is subject to any
contingent liability in connection with any exposure of any person or property
to or any release or threatened release of any hazardous substance or solid
waste into the environment on or at the Company Property or from the
operations conducted thereon.
(f) For purposes of this Agreement, "Environmental Laws" shall mean
any and all laws, statutes, ordinances, rules, regulations, orders, or
determinations of any Governmental Authority pertaining to health or the
environment in effect on the date of this Agreement in any and all
jurisdictions in which the Company Property is located, including without
limitation, the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1989 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), as amended, the
-16-
Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of 1986, as amended,
the Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection laws. The terms "hazardous
substance" and "release" (or "threatened release") have the meanings specified
in CERCLA, and the terms "solid waste" and "disposal" (or "disposed") have the
meanings specified in RCRA; provided, however, that (i) to the extent the laws
of the state in which the Company Property is located are applicable and
establish a meaning for "hazardous substance," "release," "solid waste" or
"disposal" which is broader than that specified in either CERCLA or RCRA, such
broader meaning shall apply in such state, and (ii) the terms "hazardous
substance" and "solid waste" shall include all oil and gas exploration and
production wastes that may present an endangerment to public health or welfare
or the environment, even if such wastes are specifically exempt from
classification as hazardous substances or solid wastes pursuant to CERCLA or
RCRA or the state analogues to those statutes. As used herein, "Environmental
Laws" shall not include the Occupational Safety and Health Act of 1970, as
amended (together with any rules and regulations promulgated thereunder,
"OSHA"), it being the intent of the parties that OSHA shall constitute a "law"
within the meaning of the definition of such term set forth in Section 3.15.
(g) For purposes of this Section 3.20, "Governmental Authority" shall
mean any foreign countries, the United States, the state, county, city and
political subdivisions in which the Company Property is located or which
exercises jurisdiction over any such Company Property and any court, agency,
department, commission, board, bureau or instrumentality or any of them which
exercises jurisdiction over any such Company Property.
3.21 No Illegal or Improper Transactions. Neither the Company nor
any Subsidiary has, nor has any director, officer or employee of the Company
or any Subsidiary, directly or indirectly, used funds or other assets of the
Company or any Subsidiary, or made any promise or undertaking in such regards,
for (a) illegal contributions, gifts, entertainment or other expenses relating
to political activity; (b) illegal payments to or for the benefit of
governmental officials or employees, whether domestic or foreign, (c) illegal
payments to or for the benefit of any person, firm, corporation or other
entity, or any director, officer, employee, agency or representative thereof;
or (d) the establishment or maintenance of a secret or unrecorded fund; and
there have been no knowingly false or fictitious entries made in the books or
records of the Company or any Subsidiary.
3.22 Product Liability. Section 3.22 of the Disclosure Schedule sets
-------------------
forth a description of the policy of the Company and its Subsidiaries with
respect to the giving of warranties to third parties
-17-
with respect to any products rented or sold by them, excluding any warranties
imposed by the provisions of applicable law.
3.23 Miscellaneous Other Information. Section 3.23 of the Disclosure
----------
Schedule sets forth the following information:
- --------
(a) the name and current annual compensation of each officer,
employee and agent of the Company or any Subsidiary to whom the Company or any
Subsidiary has agreed to pay annual compensation for the current year of at
least $100,000 and showing separately for each such person the amounts paid or
payable as salary, bonus payments and any indirect compensation, and any
employment agreement with respect to each such person, and the name and
compensation of each person to whom the Company or any Subsidiary paid
consulting fees as reflected in the Company's Financial Statements;
(b) the name of each bank in which the Company or any Subsidiary has
an account or safe deposit box, the number of any such accounts, the name in
which the account or box is held and the names of all persons authorized to
draw thereon or to have access thereof; and
(c) the names of all persons, if any, holding tax or other powers of
attorney from the Company, any Subsidiary, Seller, or Parent that relate to
the Company or any Subsidiary.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers and Parents as follows:
4.1 Organization; Authority. Buyer is a Corporation 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 enter into this
Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes a valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms.
4.2 No Violation: Consents and Approvals. The execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, result in any violation of or default of, or require any consent or
approval of, or notice to, any private nongovernmental party under, (a) any
provision of the charter or by-laws of Buyer, (b) any judgment, order or
decree, or material statute, law, ordinance, rule or regulation applicable to
Buyer or the property or assets of Buyer or (c) any note, bond, mortgage,
indenture,
-18-
license, permit, agreement, lease or other instrument or obligation to which
Buyer is a party or by which Buyer may be bound or affected or to which any of
its assets may be subject. No consent, approval, order or authorization of,
or registration, declaration or filing with, any court, administrative agency
or commission or other governmental entity, authority or instrumentality,
domestic or foreign, is required to be obtained or made by or with respect to
Buyer or its affiliates in connection with the execution and delivery of this
Agreement or the consummation by Buyer of the transactions contemplated
hereby, other than (i) compliance with and filings under the HSR Act, if
applicable, (ii) compliance with and filings under state environmental
statutes, if applicable, and (iii) foreign ownership, competition or title
registration statutes of Australia, Canada, Singapore, United Kingdom,
Venezuela, Malaysia, Brazil and Thailand, if applicable. consents or approvals
the failure of which to obtain would not materially impair Buyer's ability to
consummate the transactions contemplated hereby.
4.3 Litigation. There is no claim, action, suit or proceeding
pending of which Buyer has received notice by or before any governmental or
regulatory authority, or by or on behalf of any third party, which challenges
the validity of this Agreement or which, if adversely determined, would
adversely affect the ability of Buyer to consummate the transactions
contemplated by this Agreement.
4.4 Acquisition of the Interests and Shares for Investment;
Securities Act. Buyer is acquiring the Interests and the Shares for
investment purposes only and not with a view toward, or for sale in connection
with, any distribution thereof, nor with any present intention of distributing
or selling the Interests or the Shares. Buyer agrees that it will not sell,
transfer, offer for sale, pledge, hypothecate or otherwise dispose of the
Interests or the Shares in violation of any federal, state or other securities
law.
4.5 Financing. Section 4.5 of the Disclosure Schedule lists the
-------------------
names and dollar amounts of each corporation, partnership, individual or other
entity that has agreed, committed or given a written expression of interest to
loan money to Buyer to consummate the transaction contemplated herein and to
operate Buyer after the Closing (the "Financing Commitments"). True, complete
and correct copies of the Financing Commitments have been delivered to Seller.
Bain Capital, Inc., Duff & Phelps/ Inverness LLC and Harvard Private Capital
Group, Inc. (the "Investors"), together with their affiliates, have generally
agreed orally to provide $51.5 million (to be allocated between subordinated
debt and equity), and the officers and employees listed in Exhibit J (the
-------
"Management Investors") have orally agreed to be equity investors, in each
case subject to completion of due diligence and evaluation of what has been
learned in due diligence conducted to date or as may be disclosed herein,
including, without limitation, insofar as it relates to the pricing and
structure of the proposed transactions, and satisfactory documentation. All
investments of Bain Capital Inc., Duff & Phelps/Inverness LLC and the
Management Investors in Buyer as of the Closing will be in the form of equity
investments.
-19-
4.6 Brokers. Neither Buyer nor any of its affiliates has retained a
broker, finder or financial advisor or other person who is or will be entitled
to any brokerage fees, commissions, finders' fees or financial advisory fees
in connection with the transactions contemplated hereby for which any Seller
or Parent is or will be liable.
ARTICLE V
COVENANTS OF THE PARTIES
5.1 Conduct of the Company's Business. Except as contemplated by
this Agreement, during the period from the date of this Agreement to the
Closing Date, Sellers shall cause the Company and the Subsidiaries to conduct
their businesses and operations in the ordinary course. Without limiting the
generality of the foregoing, and, except as contemplated by this Agreement,
during the period from the date of this Agreement to the Closing Date, without
the prior written consent of Buyer (which consent shall not be unreasonably
withheld or delayed), Sellers and Parents will not permit the Company or any
Subsidiary to:
(a) create, incur, assume or guarantee any indebtedness for borrowed
money (including, without limitation, obligations in respect of capital
leases), other than borrowings under the Existing Credit Agreement;
(b) declare, set aside or pay any dividend or other distribution in
respect of the Interests or the Shares, or redeem, purchase or otherwise
acquire for value any of the Company's partnership interests or the Shares;
(c) issue, sell or deliver any Interests or Shares, any other equity
interest in the Company or any of the Subsidiaries, or any securities
convertible into or exchangeable for Interests or Shares, or grant or enter
into any options, warrants, rights, agreements or commitments with respect to
the issuance of Interests or Shares, or amend any terms of any such securities
or agreements;
(d) incur or commit to any capital expenditures, obligations or
liabilities in connection therewith, other than those that were included in
the annual capital budget approved by the Management Committee of the Company
and that do not exceed $200,000 in the aggregate;
(e) enter into any lease or other agreement that provides for an
annual payment by the Company in excess of $250,000;
(f) amend, agree to amend or waive the terms of the Partnership
Agreement of the Company;
-20-
(g) amend or agree to amend the constituent organizational documents
of NOW Australia or NOW Singapore;
(h) grant Management Committee approval of any of the actions
specified by Section 4.4 of the Partnership Agreement of the Company;
(i) take any action by either or both Partners as opposed to any
actions by the Company through its officers, employees and agents on behalf of
the Company;
(j) merge or agree to merge or consolidate the Company, NOW Australia
or NOW Singapore with any corporation, partnership or other entity;
(k) enter into any new contract or agreement between the Company and
the Subsidiaries with any Seller, Parent or affiliate of either Parent; or
(l) agree, whether in writing or otherwise, to do any of the
foregoing.
5.2 Access to Information; Confidentiality. (a) During the period
from the date of this Agreement through the Closing Date, Sellers shall cause
the Company and the Subsidiaries to give Buyer and its authorized
representatives (which shall include representatives of those entities
providing financing for the transaction) reasonable access during regular
business hours to all plants, offices, warehouses, facilities, books and
records of the Company and the Subsidiaries as they may reasonably request;
provided, however, (i) that Buyer and its representatives shall take such
- -------- -------
action as is deemed necessary in the reasonable judgment of Sellers to
schedule their access and visits through a designated officer of the Company
or Sellers and in such a way as to avoid disrupting the normal business of the
Company and the Subsidiaries, (ii) the Company and the Subsidiaries shall not
be required to take any action which would constitute a waiver of the
attorney-client privilege, (iii) the Company and the Subsidiaries need not
supply Buyer with any information which, in the reasonable judgment of
Sellers, the Company and the Subsidiaries are under legal obligation not to
supply and (iv) Buyer shall not be permitted to perform environmental sampling
or testing except pursuant to the prior written consent of Sellers.
(b) Buyer shall hold and shall cause its affiliates, consultants and
advisors to hold any information that they receive in connection with the
transactions contemplated by this Agreement in strict confidence in accordance
with and subject to the terms of the Non-Disclosure Agreement dated as of
February 15, 1995 by Duff & Phelps/Inverness L.L.C., in favor of the Company,
Sellers and Parents (the "Confidentiality Agreement").
5.3 Efforts. Subject to the terms and conditions of this Agreement,
each of the parties hereto shall use commercially reasonable efforts to take,
or cause to be taken, all action, and to do, or cause to
-21-
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement at
the earliest practicable date.
5.4 Consents. Without limiting the generality of Section 5.3 hereof,
each of the parties hereto shall use commercially reasonable efforts to obtain
all licenses, permits, authorizations, consents and approvals of all third
parties and governmental authorities necessary in connection with the
consummation of the transactions contemplated by this Agreement prior to the
Closing. Sellers shall not, however, have any obligation to pay any fee to
any third party for the purpose of obtaining any consent or approval or any
costs and expenses of any third party resulting from the process of obtaining
such consent or approval. Each of the parties hereto shall make or cause to
be made all filings and submissions under laws and regulations applicable to
it as may be required for the consummation of the transactions contemplated by
this Agreement. Buyer and Sellers shall coordinate and cooperate with each
other in exchanging such information and assistance as any of the parties
hereto may reasonably request in connection with the foregoing.
5.5 Government Notification. Buyer and Sellers shall use
commercially reasonable efforts to obtain all authorizations or waivers
required under the HSR Act, and under any foreign ownership, competition or
title registration statutes of Australia, Canada, Singapore, United Kingdom,
Venezuela, Malaysia, Brazil and Thailand, to consummate the transactions
contemplated hereby, including without limitation, making all filings required
in connection therewith.
5.6 Public Announcements. Sellers and Buyer shall not, and Sellers
shall cause the Company and the Subsidiaries and Parents not to, issue any
written report, statement or press release to the public or otherwise make any
public statement with respect to this Agreement and the transactions
contemplated hereby without prior consultation with and approval of the other
party, except as may be required by law or may be necessary in order to
discharge its disclosure obligations, in which case such party nevertheless
shall advise the other party and discuss the contents of the disclosure before
issuing any such report, statement or press release.
5.7 Supplemental Disclosure. Sellers shall from time to time prior
to the Closing supplement or amend the Disclosure Schedule with respect to
-------------------
(a) any matter that existed as of the date of this Agreement and should have
been set forth or described in the Disclosure Schedule but was not and (b) any
-------------------
matter hereafter arising which, if existing as of the date of this Agreement,
would have been required to be set forth or described in the Disclosure
----------
Schedule.
- -------
5.8 Access to Books and Records Following the Closing Following the
Closing. Buyer shall, and shall cause the Company and the Subsidiaries to,
permit Sellers and their authorized representatives, during normal business
hours and upon reasonable notice, to have reasonable access to,
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and examine and make copies of, all books and records of the Company and the
Subsidiaries which relate to transactions or events occurring prior to the
Closing or transactions or events occurring subsequent to the Closing which
are related to or arise out of transactions or events occurring prior to the
Closing. Buyer agrees that it shall retain all such books and records for a
period of seven years, or for a longer period if required by law, following
the Closing.
5.9 No Other Bids. Until the first to occur of the Closing or the
termination of this Agreement pursuant to Section IX hereof, the Sellers, the
Parents and the Company shall not, and Sellers, Parents and the Company shall
not authorize or permit any affiliate, officer, director or employee of, or
any investment banker, attorney, accountant or other representative retained
by, Sellers and Parents or the Company to, (a) entertain, encourage, solicit
or initiate any inquiries or the making of any proposal that may reasonably be
expected to lead to any proposal to purchase any of the Interests, and of the
Shares or the Company or (b) participate in any discussions or negotiations,
or provide third parties with any information relating to any such inquiry or
proposal. The Company, Sellers and Parents shall reasonably promptly advise
Buyer of any such inquiries or proposals received by them.
5.10 No Competition. In consideration of the purchase of the
Interests, and all of the other promises and covenants contained herein, each
of Sellers and Parents agree that for a period commencing upon the Closing and
ending upon the fifth anniversary thereof they shall not directly or
indirectly, alone or with others, engage in any business conducted by the
Company and the Subsidiaries at the Closing, except for (i) those businesses
(other than the Company and the Subsidiaries) owned by Sellers at Closing in
any geographic area in which the Company and the Subsidiaries do business at
Closing in competition with Buyer, the Company or the Subsidiaries, (ii) any
activities by either Parent or its affiliates in the manufacture, distribution
and sale of carbon steel, stainless steel, specialty steel or other products
manufactured by either Parent or its affiliates, including, but not limited
to, the manufacture, sale and distribution of oil country tubular goods,
standard and line pipe or drill pipe, and (iii) any joint venture, partnership
or other contract, agreement or arrangement by Marathon Oil Company, Delhi Gas
Pipeline Corporation or other affiliate of USX for the purchase or use (but
not for resale) of any product or service manufactured, distributed, sole or
provided by Buyer, the Company or any Subsidiary. Further, Sellers and
Parents shall not, unless required by subpoena or other process by any
Government Authority, during such period and in such geographic locations,
divulge, communicate, use to the detriment of Buyer, the Company or the
Subsidiaries or for the benefit of any person or organization, any
confidential information or trade secrets of the Company's and the
Subsidiaries' businesses. Nothing herein shall commit Buyer, the Company or
the Subsidiaries, on the one hand, or any Parent, Seller or affiliate thereof,
on the other hand, to engage in any transaction or enter into any
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agreement or contract other than as contained in or contemplated by any
contract or agreement existing between them as of the Closing Date. The
parties believe this is a reasonable and necessary restriction for purposes of
protecting the goodwill and other business interest purchased by Buyer, which
includes Buyer's expectation of expanding its business throughout the world
without competition from Sellers and Parents for such period; and provided
further, that the parties agree that the world is a reasonable competitive
restriction. Sellers or Parents agree that a breach or violation of this
covenant not to compete by such Seller or Parent shall entitle Buyer, as a
matter of right, to an injunction, without necessity of posting bond, issued
by any court of competent jurisdiction, restraining any further or continued
breach or violation of this covenant. Such right to an injunction shall be
cumulative and in addition to, and not in lieu of, any other remedies to which
Buyer may show itself justly entitled. In the event that a Court should
determine that any restriction herein is unenforceable, the parties, agree
that this Agreement shall nevertheless be enforceable for the maximum term and
maximum geographical area allowable by law. Without limiting the foregoing,
this covenant shall be enforceable by the remedy of specific performance,
injunction, and/or damages. The parties specifically agree that the remedy of
damages alone is inadequate.
5.11 Agreement Concerning Employees. Sellers and Parents agree that
they shall not directly, or indirectly through a future subsidiary, affiliate
or otherwise, hire, retain, employ or otherwise provide compensation for or to
(a) through the first anniversary of the Closing Date, any employee of the
Company or any Subsidiary who was employed by the Company or any Subsidiary on
the date hereof or the Closing Date or (b) through the third anniversary of
the Closing Date, any officer of the Company or any Subsidiary who was
employed by the Company or such subsidiary or the date hereof or the Closing
Date, in either such case without the prior written consent of Buyer and
excluding benefits due any such person under any pension or employee benefit
plan of either Parent. Buyer agrees that any remedy at law for any actual or
threatened breach of the provisions of this Section 5.11 would be inadequate
and that Buyer shall be entitled to specific performance thereof of injunctive
relief, or both, by temporary or permanent injunction or such other
appropriate judicial remedy, writ or order as may be entered by a court of
competent jurisdiction. Any such remedy shall be in addition to any damages
that Buyer may be legally entitled to recover as a result of any breach by
Sellers or Parents of any provisions of this Section 5.11.
5.12 Potential Acquisition. Buyer shall be permitted to pursue, at
Buyer's cost, the acquisition of Continental Emsco Company utilizing the
management of the Company (without reimbursing the Company for services of
such management personnel). Buyer shall be permitted to disclose to The LTV
Corporation, Continental Emsco Company, SCF Partners of Houston, their
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representatives and such other parties as Sellers may reasonably approve, that
Buyer and Sellers have entered into this Agreement for the acquisition of the
Company.
5.13 No Recording. Prior to the Closing, Buyer shall not record this
Agreement or any memorandum hereof in any real property, intellectual property
or other title registration records.
5.14 Financing. Buyer shall use commercially reasonable efforts to
consummate the Financing Commitments. Buyer shall deliver to Sellers copies
of all agreements and commitment letters entered into by Buyer pursuant to the
Financing Commitments and shall keep Sellers informed of material developments
concerning the Financing Commitments. Buyer shall use commercially reasonable
efforts to arrange for Sellers to speak with the other parties to the
Financing Commitments. Parents and Sellers shall use commercially reasonable
efforts to cooperate with Buyer in obtaining the Financing Commitments and
consummating the financings contemplated thereunder.
5.15 Environmental Study. The Company, at its own cost and expense,
shall commission an environmental study of the Company and the Subsidiaries by
IT Corporation (the "Environmental Consultant") as set forth in an
Environmental Consultant's proposal to be reasonably agreed upon by Sellers
and Buyer.. Parents and Sellers shall cooperate and shall cause the Company
and the Subsidiaries to cooperate with Buyer and the Environmental Consultant
in preparation of the environmental study. The Company and the Environmental
Consultant shall provide Sellers and Buyer with copies of all preliminary and
draft reports, an opportunity to comment on preliminary and draft reports
before they become final, and an opportunity to observe the Environmental
Consultant's work. The Environmental Consultant's final written report shall
be deemed to constitute a supplement to Section 3.20 of the Disclosure
----------
Schedule made by Sellers and Parents pursuant to Section 5.7 and shall be
- --------
treated as confidential in accordance with the Confidentiality Agreement.
5.16 Facility Questionnaire. Following the execution of this
Agreement, Sellers may cause the Company and the Subsidiaries to obtain
facility questionnaires as to violations of Environmental Law at any material
facilities of the Company or any Subsidiary, provided that the form of such
questionnaires shall be mutually agreed upon by Sellers and Buyer.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Tax Matters. (a) Preparation and Filing of Tax Returns.
(i) With respect to each Tax Return of the Company or any
Subsidiary including a taxable period ending on or before the Closing Date
that is required to be filed after the Closing Date, the Company shall cause
such Tax Return to be prepared, shall cause to be
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included in such Tax Return all Tax Items required to be included therein,
shall cause such Tax Return to be timely filed with the appropriate taxing
authority, and shall pay or cause to be paid the amount of Taxes shown to be
due on such Tax Return.
(ii) With respect to each Tax Return of the Sellers or Parents
including a taxable period ending on or before the Closing Date that is
required to be filed after the Closing Date, Sellers or Parents shall
(A) cause to be included in such Tax Returns all Tax Items required to be
included in such Tax Returns, (B) file timely all such Tax Returns with the
appropriate taxing authorities, and (C) pay timely all Taxes due with respect
to the periods included in such Tax Returns.
(iii) Any Tax Return to be prepared pursuant to the provisions
of this Section 6.1 shall be prepared in a manner consistent with practices
followed in prior years with respect to similar Tax Returns, except for
changes required by changes in law.
(b) Refunds. If after the Closing Date Sellers or Parents receives
or is credited with a refund of any Tax attributable to the utilization or
carryback of any Tax Item arising after the Closing Date, Sellers or Parents
shall pay to Buyer an amount equal to the amount of such refund together with
any interest received from or credit thereon by the applicable taxing
authority.
(c) Access to Information.
(i) Sellers and Parents shall grant or cause the Company or any
Subsidiary to grant to Buyer (or its designees) access at all reasonable times
to all of the information, books and records relating to the Company and each
Subsidiary within the possession of Sellers, Parents, the Company or any
Subsidiary (including workpapers and correspondence with taxing authorities),
and shall afford Buyer (or its designees) the right (at Buyer's expense) to
take extracts therefrom and to make copies thereof, to the extent reasonably
necessary to permit Buyer (or its designees) to prepare Tax Returns, to
conduct negotiations with Tax authorities, and to implement the provisions of,
or to investigate or defend any claims between the parties arising under, this
Agreement.
(ii) Buyer shall cause the Company to provide on a timely basis
all state apportionment data reasonably required by Sellers to prepare
Sellers' tax returns. Further, Buyer shall grant or cause the Company or any
Subsidiary to grant to Sellers (or their designees) access at all reasonable
times to all of the information, books and records relating to the Company or
any Subsidiary within the possession of Buyer, the Company or any Subsidiary
(including workpapers and correspondence with taxing authorities), and shall
afford Seller (or its designees) the right (at Seller's expense) to take
extracts therefrom and to make copies thereof, to the extent
-26-
reasonably necessary to permit Sellers (or their designees) to prepare Tax
Returns, to conduct negotiations with Tax authorities, and to implement the
provisions of, or to investigate or defend any claims between the parties
arising under, this Agreement.
(iii) Each of the parties hereto will preserve and retain all
schedules, workpapers and other documents relating to any Tax Returns or to
any claims, audits or other proceedings affecting the Company or any
Subsidiary until the expiration of the statute of limitations (including
extensions) applicable to the taxable period to which such documents relate or
until the final determination of any controversy with respect to such taxable
period, and until the final determination of any payments that may be required
with respect to such taxable period under this Agreement.
(d) Sellers' and Parents' Indemnifications. Sellers and Parents
hereby agree to protect, defend, indemnify and hold harmless Buyer, the
Company and any Subsidiary from and against, and agrees to pay, all Taxes
imposed and all costs and expenses (including, without limitation, litigation
costs and reasonable attorneys' and accountants' fees and disbursements)
incurred (all herein referred to as "Tax Losses") as a result of a claim,
notice of deficiency, or assessment by, or any obligation owing to, any taxing
authority for any Taxes of any corporation (other than the Company or any
Subsidiary) that is or was a member of any affiliated group of corporations of
which the Company or any Subsidiary was a member at any time on or prior to
the Closing Date.
(e) Buyer Indemnifications. Buyer agrees to protect, defend,
indemnify and hold harmless Sellers from and against, and agrees to pay, all
Tax Losses incurred as a result of a claim, notice of deficiency, or
assessment by, or any obligation owing to, any taxing authority for any Taxes
of the Company or any Subsidiary attributable to any taxable period after the
Closing Date ("Post-Closing Taxable Period"); and
(f) Indemnification Procedures.
(i) If a claim shall be made by any taxing authority that, if
successful, would result in the indemnification of a party under this
Agreement (referred to herein as the "Tax Indemnified Party"), the Tax
Indemnified Party shall promptly notify the party obligated under this
Agreement to so indemnify (referred to herein as the "Tax Indemnifying Party")
in writing of such fact.
(ii) The Tax Indemnified Party shall take such action in
connection with contesting such claim as the Tax Indemnifying Party shall
reasonably request in writing from time to time, including the selection of
counsel and experts and the execution of powers of attorney, provided that
(A) within 30 days after the notice described in Section 6.1(f)(i) has been
delivered (or such
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earlier date that any payment of Taxes is due by the Tax Indemnified Party but
in no event sooner than five days after the Tax Indemnifying Party's receipt
of such notice), the Tax Indemnifying Party requests that such claim be
contested, (B) the Tax Indemnifying Party shall have agreed to pay to the Tax
Indemnified Party all costs and expenses that the Tax Indemnified Party incurs
in connection with contesting such claim, including, without limitation,
reasonable attorneys' and accountants' fees and disbursements, and (C) if the
Tax Indemnified Party is requested by the Tax Indemnifying Party to pay the
Tax claimed and sue for a refund, the Tax Indemnifying Party shall have
advanced to the Tax Indemnified Party, on an interest-free basis, the amount
of such claim. The Tax Indemnified Party shall not make any payment of such
claim for at least 30 days (or such shorter period as may be required by
applicable law) after the giving of the notice required by Section 6.1(f)(i),
shall give to the Tax Indemnifying Party any information reasonably requested
relating to such claim, and otherwise shall cooperate with the Tax
Indemnifying Party in good faith in order to contest effectively any such
claim.
(iii) Subject to the provisions of Section 6.1(f)(ii), the Tax
Indemnified Party shall enter into a settlement of such contest with the
applicable taxing authority or prosecute such contest to a determination in a
court or other tribunal of initial or appellate jurisdiction, all as the Tax
Indemnifying Party may request.
(iv) If, after actual receipt by the Tax Indemnified Party of an
amount advanced by the Tax Indemnifying Party pursuant to
Section 6.1(f)(ii)(C), the extent of the liability of the Tax Indemnified
Party with respect to the claim shall be established by the final judgment or
decree of a court or other tribunal or a final and binding settlement with an
administrative agency having jurisdiction thereof, the Tax Indemnified Party
shall promptly repay to the Tax Indemnifying Party the amount advanced to the
extent of any refund received by the Tax Indemnified Party with respect to the
claim together with any interest received thereon from the applicable taxing
authority and any recovery of legal fees from such taxing authority, net of
any Taxes as are required to be paid by the Tax Indemnified Party with respect
to such refund, interest or legal fees (calculated at the maximum applicable
statutory rate of Tax without regard to any other Tax Items). Notwithstanding
the foregoing, the Tax Indemnified Party shall not be required to make any
payment hereunder before such time as the Tax Indemnifying Party shall have
made all payments or indemnities then due with respect to the Tax Indemnified
Party pursuant to this Agreement.
(v) Promptly after a final determination the Tax Indemnifying
Party shall pay to the Tax Indemnified Party the amount of any Tax Losses to
which the Tax Indemnified Party may become entitled by reason of the
provisions of this Section 6.1.
(g) Survival. Anything to the contrary in this Agreement not
withstanding, the agreements set forth in this Article VI, shall survive the
Closing and shall not terminate until one day after the expiration of the
statute of limitations (including extensions) applicable to any Tax covered by
this Article VI.
(h) Nature of Payments. Any payment from Buyer to Seller pursuant to
this Article VI shall be treated for Tax purposes as an increase in the
purchase price and any payment from Seller to Buyer pursuant to this
Section 6.1 shall be treated for Tax purposes as a reduction in the purchase
price.
(i) Allocation. The Purchase Price shall be allocated among the
assets of the Company as set forth in Exhibit C. Buyer and Sellers shall not
-------
take any position on any Tax Return that is inconsistent with the allocation
of the Purchase Price as set forth in Exhibit C, and Buyer and Sellers shall
-------
duly prepare and timely file such reports and information returns as may be
required under the Code and any Treasury Regulations thereunder and any
corresponding provisions of applicable state income tax laws to report the
allocation of the Purchase Price among the Shares and the assets of the
Company as set forth in Exhibit C.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS
OF SELLERS AND PARENTS
7.1 Conditions. The obligations of Sellers and Parents to consummate
the transactions contemplated by this Agreement are subject to the fulfillment
at or prior to the Closing of each of the following conditions (any or all of
which may be waived in whole or in part by Sellers and Parents):
(a) Representations and Warranties. The representations and
warranties made by Buyer in this Agreement shall be true, complete and
accurate in all material respects as of the date when made and at and as of
the Closing Date, as though such representations and warranties were made at
and as of the Closing Date, except for changes permitted by the terms of this
Agreement.
(b) Performance. Buyer shall have performed and complied, in all
material respects, with all agreements, obligations, covenants and conditions
required by this Agreement to be so performed or complied with by Buyer at or
prior to the Closing.
(c) Officer's Certificate. Buyer shall have delivered to Sellers a
certificate, dated as of the Closing Date, substantially in the form of
Exhibit D hereto, executed by the President
- ------
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of Buyer, certifying the fulfillment of the conditions specified in
Subsections 7.1(a) and 7.1(b) hereof.
(d) Opinion of Counsel. Buyer shall have delivered to Sellers and
Parents an opinion of legal counsel to Buyer, dated the Closing Date,
substantially in the form of Exhibit E hereto.
-------
(e) No Injunction. On the Closing Date, there shall not be in effect
any judgment, order, injunction or decree issued by a court of competent
jurisdiction restraining or prohibiting consummation of the transactions
contemplated by this Agreement.
(f) Expiration or Termination of HSR Periods. Any waiting periods
applicable to the transactions contemplated by this Agreement under the HSR
Act shall have expired or been terminated.
(g) Approvals and Consents. On the Closing Date all of the approvals
and consents set forth in Section 3.6 of the Disclosure Schedule as being
-------------------
required to be obtained prior to Closing, shall have been obtained.
(h) Environmental Consultant's Report. Sellers shall have received
final copies of the Environmental Consultant's report as contemplated by
Section 5.15 hereof.
(i) Management Investor Certificates. Sellers shall have received a
certificate in substantially the form attached hereto as Exhibit K from each
-------
of the persons listed on Exhibit J.
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ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
8.1 Conditions. The obligations of Buyer to consummate the
transactions contemplated by this Agreement are subject to the fulfillment at
or prior to the Closing of each of the following conditions (any or all of
which may be waived in whole or in part by Buyer):
(a) Representations and Warranties. The representations and warranties made
by Sellers and Parents in this Agreement shall be true, complete and accurate
in all material respects, as of the date when made and at and as of the
Closing Date as though such representations and warranties were made at and as
of the Closing Date, except for changes permitted by the terms of this
Agreement (provided, however, that for purposes of determining whether this
condition has been satisfied, any supplements or amendments to the Disclosure
----------
Schedule pursuant to Section 5.7 shall be disregarded).
- --------
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(b) Performance. Sellers and Parents shall have performed and
complied, in all material respects, with all agreements, obligations,
covenants and conditions required by this Agreement to be so performed or
complied with by Sellers and Parents at or prior to the Closing.
(c) Compliance Certificate. Sellers and Parents shall have delivered
to Buyer a certificate, dated the Closing Date, substantially in the form of
Exhibit F hereto, executed by representatives of Sellers and of Parents
- ------
certifying the fulfillment of the conditions specified in Subsections 8.1(a)
and 8.1(b) hereof.
(d) Opinions of Counsel. Sellers and Parents shall have delivered to
Buyer opinions of legal counsel to Seller and Parent, dated the Closing Date,
substantially in the form of Exhibit G hereto.
------
(e) No Injunction. On the Closing Date, there shall not be in effect
any judgment, order, injunction or decree issued by a court of competent
jurisdiction restraining or prohibiting consummation of the transactions
contemplated by this Agreement.
(f) Expiration or Termination of HSR Periods. Any waiting periods
applicable to the transactions contemplated by this Agreement under the HSR
Act shall have expired or been terminated.
(g) Financing. Buyer shall have completed financing for the
transactions contemplated by this Agreement substantially on the terms
contemplated by the Financing Commitments or on other terms reasonably
acceptable to Buyer.
(h) Approvals and Consents. On the Closing Date all of the approvals
and consents set forth in Section 3.6 of the Disclosure Schedule as being
-------------------
required to be obtained prior to Closing, shall have been obtained.
(i) Title. Buyer and its counsel shall be reasonably satisfied with
the status of title of the Company and the Subsidiaries to their respective
assets, and Buyer shall be able to obtain, at the Company's expense one or
more ALTA form of Owner's Policy of Title Insurance in form, substance and
amount satisfactory to Buyer and its counsel, ensuring that as of the Closing
Buyer, the Company or the Subsidiaries, as the case may be, have good and
marketable title to the Real Property Interests, subject only to those
exceptions reasonably acceptable to Buyer and its counsel, identified in
Section 3.9(b) of the Disclosure Schedule. as requiring title policies as a
-------------------
condition to closing.
(j) Material Adverse Changes. Except as set forth in Section 3.8 of
the Disclosure Schedule, Buyer shall be satisfied in its sole discretion that
-------------------
since January 1, 1995, there has been no material adverse change in the status
of the properties, assets, liabilities, financial condition,
-31-
results of operation, cash flow and prospects of the Company and the
Subsidiaries on a consolidated basis and Buyer shall not have discovered any
other fact or circumstance relating to the business of the Company and the
Subsidiaries that materially adversely affects the properties, assets,
liabilities, financial condition, results of operation, cash flow or prospects
of the Company and the Subsidiaries on a consolidated basis.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) at any time, by mutual written agreement of Sellers and Buyer; or
(b) at any time after December 29, 1995, by either Sellers or Buyer,
if the Closing shall not have occurred for any reason, other than a breach of
this Agreement by the terminating party, which shall extend the termination
date until such breach is cured.
9.2 Procedure and Effect of Termination. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated hereby pursuant to Section 9.1(b) hereof, written notice thereof
shall forthwith be given by the party so terminating to the other parties, and
this Agreement shall terminate, and the transactions contemplated hereby shall
be abandoned, without further action by Sellers, Parents or Buyer. If this
Agreement is terminated pursuant to Section 9.1(a) or (b) hereof:
(a) Buyer shall return all documents, work papers and other materials
(and all copies thereof) received from Sellers, Parents or the Company
relating to the transactions contemplated hereby, whether so obtained before
or after the execution hereof, to the party furnishing the same, and all
confidential information received by Buyer with respect to the Company and the
Subsidiaries shall be treated in accordance with Section 5.2 hereof and the
Confidentiality Agreement referred to in said Section;
(b) At the option of Sellers, all filings, applications and other
submissions made pursuant to Sections 5.3, 5.4 and 5.5 hereof shall to the
extent practicable, be withdrawn from the agency or other person to which
made; and
(c) The obligations provided for in this Section 9.2 and Section 10.1
hereof, the confidentiality provision contained in Section 5.2 hereof, the
Confidentiality Agreement referred to in said Section and the Company's
obligation to pay for the Environmental Consultant
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pursuant to Section 5.15 and title insurance pursuant to Section 8.1 shall
survive any termination of this Agreement.
9.3 Amendment, Modification and Waiver. This Agreement may be
amended, modified or supplemented at any time by written agreement of the
parties hereto. Any failure of Seller or Buyer to comply with any term or
provision of this Agreement may be waived by the other party at any time by an
instrument in writing signed by or on behalf of such other party, but such
waiver or failure to insist upon strict compliance with such term or provision
shall not operate as a waiver of, or estoppel with respect to, any subsequent
or other failure to comply.
ARTICLE X
FEES AND EXPENSES; SURVIVAL OF
REPRESENTATIONS; INDEMNIFICATION
10.1 Fees and Expenses. Whether or not the transactions contemplated
hereby are consummated pursuant hereto, each of the Sellers, Parents and Buyer
shall pay all fees and expenses incurred by it or on its behalf in connection
with or in anticipation of this Agreement and the consummation of the
transactions contemplated hereby.
10.2 Survival of Representations. The representations and warranties
in this Agreement and in any other document delivered in connection herewith,
other than the representations and warranties contained in Sections 3.1, 3.2,
3.4, 3.5(a), 3.9(a) and (b) (solely with respect to title to the properties
specifically identified in Exhibit I), 3.13(a) and (b), 3.17, 4.1, 4.2, 4.4
-------
and 4.6, as same are made on the date hereof and at Closing pursuant to the
certificates required by Sections 7.1(c) and 8.1(c), (collectively, the
"Surviving Representations"), shall not survive the Closing and shall
terminate on the Closing Date. The Surviving Representations shall survive
Closing and any party claiming a breach thereof shall have the right to assert
such claim at any time following Closing. Accordingly, the parties
acknowledge and agree that, except for the Surviving Representations and
without affecting the liability of any party under the indemnification
provisions hereunder, following Closing no party hereto shall have any
liability to any other party hereto for or on account of the breach by any
party of its representations and warranties hereunder and that prior to
Closing, the sole remedy any party shall have for breach of any representation
or warranty of another party shall be to elect to terminate this Agreement to
the extent permitted under Article IX.
10.3 National Supply Agreement to Indemnify. Upon the terms and
conditions hereof, National Supply agrees to indemnify, defend and hold
harmless Buyer and Buyer's shareholders, directors, officers, employees and
agents and, if the Closing occurs, the Company and the Subsidiaries
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and the shareholders, directors, employees and agents of the Company and the
Subsidiaries (collectively, the "Buyer Indemnified Parties"), as follows:
(a) from and against all demands, claims, actions, causes of action,
assessments, losses, damages, liabilities, costs and expenses (but excluding
any consequential damages or lost profits with respect to any claims, other
than claims by third parties, by and among Buyer Indemnified Parties and
Seller Indemnified Parties), including, without limitation, interest,
penalties and reasonable attorneys' fees (collectively, "Damages") that are
attributable to or result from the breach of any of the Surviving
Representations made by such Seller or its Parent (as provided in the lead-in
paragraph to Article III);
(b) Damages attributable to or resulting from the breach by (i) such
Seller of any covenant or other agreement of Sellers contained in this
Agreement or (ii) the Parent of such Seller of any covenant or other agreement
of such Parent contained in this Agreement;
(c) fifty percent (50%) of any Damages attributable to or resulting
from any death, personal injury or property damage suffered by the Company,
any Subsidiary, any Seller, either Parent or their directors, officers,
employees or agents that results from or is attributable to the conduct by
Buyer or its representatives or agents of Buyer's due diligence investigation
of the Company and its Subsidiaries, INCLUDING ANY CLAIMS BASED UPON THE
NEGLIGENCE OR ALLEGED NEGLIGENCE OF ANY OF THE BUYER INDEMNIFIED PARTIES;
(d) subject to the cost sharing set forth in Section 10.5 hereof,
fifty percent (50%) of all Damages (which shall include, without limitation,
all costs or expenses incurred in connection with any necessary studies,
reports, sampling, disposal, removal, treatment or remediation of
contamination, mitigation or compensation for damages to natural resources,
site-monitoring and post-closure care related to a release of hazardous
substances or solid waste into the environment or the violation of any
Environmental Laws (such costs and expenses being "Environmental Costs"))
attributable to or resulting from any acts, omissions or operations of the
Company or any Subsidiary, or their predecessors in interest, and any
conditions existing on any assets or properties of the Company or any
Subsidiary, or their predecessors in interest, in each case prior to April 1,
1987; provided, however, that (i) with respect to the properties listed on
Exhibit H where National Supply is identified as the "Contributing Party" (and
- -------
with respect to any activities conducted thereon), National Supply shall be
responsible for one hundred percent (100%) of such Damages, (ii) such
indemnity shall only cover Environmental Costs if (A) the Environmental Costs
are attributable to or arise out of the violation of an
-34-
Environmental Law with respect to a Company Property or any operations
conducted thereon or any on-site or off-site remedial obligations under
Environmental Laws that result from conditions existing or operations
conducted on any Company Property and (B) such Environmental Costs do not
result from any Governmental Authority action voluntarily initiated by Buyer
or Buyer's successors, except where Buyer or such successor is obligated to
initiate such action under applicable Environmental Laws, and (iii) such
indemnity shall not cover Environmental Costs that are attributable to
environmental conditions that are disclosed in Section 3.20 of the Disclosure
----------
Schedule;
- --------
(e) subject to the cost sharing set forth in Section 10.5 hereof,
fifty percent (50%) of any Damages incurred by any Buyer Indemnified Party
arising out of the assets, businesses or properties owned, leased or operated
after April 1, 1987, by the Company or any Subsidiary, which businesses or
properties were disposed of or discontinued prior to the Closing other than
for matters contained in the Disclosure Schedule; and
-------------------
(f) any Damages incurred by any Buyer Indemnified Party arising out
of or relating to any pension or employee benefit plan sponsored by Armco or
any affiliate of Armco.
It is agreed that the indemnities set forth in clauses (a)-(f) above
constitute an agreed allocation of liability to National Supply and shall
apply WITHOUT REGARD TO THE NEGLIGENCE OR ALLEGED NEGLIGENCE OF ANY OF THE
BUYER INDEMNIFIED PARTIES.
10.4 Oilwell Agreement to Indemnify. Upon the terms and conditions
hereof, Oilwell agrees to indemnify, defend and hold harmless Buyer and
Buyer's shareholders, directors, officers, employees and agents and, if the
Closing occurs, the Company, the Subsidiaries and the shareholders, directors,
employees and agents of the Buyer Indemnified Parties as follows:
(a) from and against Damages that are attributable to or result from
the breach of any of the Surviving Representations made by such Seller or its
Parent (as provided in the lead-in paragraph to Article III);
(b) Damages attributable to or resulting from the breach by (i) such
Seller of any covenant or other agreement of Sellers contained in this
Agreement or (ii) the Parent of such Seller of any covenant or other agreement
of such Parent contained in this Agreement;
(c) fifty percent (50%) of any Damages attributable to or resulting
from any death, personal injury or property damage suffered by the Company,
any Subsidiary, any Seller, either Parent or their directors, officers,
employees or agents that results from or is attributable to the conduct by
Buyer or its representatives or agents of Buyer's due diligence investigation
of the Company and its Subsidiaries, INCLUDING ANY CLAIMS BASED UPON THE
NEGLIGENCE OR ALLEGED NEGLI-
-35-
GENCE OF ANY OF THE BUYER INDEMNIFIED PARTIES;
(d) subject to the cost sharing set forth in Section 10.5 hereof,
fifty percent (50%) of all Damages (which shall include, without limitation,
all Environmental Costs) attributable to or resulting from any acts, omissions
or operations of the Company or any Subsidiary, or their predecessors in
interest, and any conditions existing on any assets or properties of the
Company or any Subsidiary, or their predecessors in interest, in each case
prior to April 1, 1987; provided, however, that (i) with respect to the
properties listed on Exhibit H where Oilwell is identified as the
-------
"Contributing Party" (and with respect to any activities conducted thereon),
Oilwell shall be responsible for one hundred percent (100%) of such Damages,
(ii) such indemnity shall only cover Environmental Costs if (A) the
Environmental Costs are attributable to or arise out of the violation of an
Environmental Law with respect to a Company Property or any operations
conducted thereon or any on-site or off-site remedial obligations under
Environmental Laws that result from conditions existing or operations
conducted on any Company Property and (B) such Environmental Costs do not
result from any Governmental Authority action voluntarily initiated by Buyer
or Buyer's successors, except where Buyer or such successor is obligated to
initiate such action under applicable Environmental Laws, and (iii) such
indemnity shall not cover Environmental Costs that are attributable to
environmental conditions that are disclosed in Section 3.20 of the Disclosure
----------
Schedule.
- --------
(e) subject to the cost sharing set forth in Section 10.5, fifty
percent (50%) of any Damages incurred by any Buyer Indemnified Party arising
out of the assets, businesses or properties owned, leased or operated after
April 1, 1987, by the Company or any Subsidiary, which businesses or
properties were disposed of or discontinued prior to the Closing other than
for matters contained in the Disclosure Schedule; and
-------------------
(f) any Damages incurred by any Buyer Indemnified Party arising out
of or relating to any pension or employee benefit plan sponsored by USX or any
affiliate of USX.
It is agreed that the indemnities set forth in clauses (a)-(f) above
constitute an agreed allocation of liability to Oilwell and shall apply
WITHOUT REGARD TO THE NEGLIGENCE OR ALLEGED NEGLIGENCE OF ANY OF THE BUYER
INDEMNIFIED PARTIES.
10.5 Sellers' and Parents' Limitation of Liability. Anything in this
Agreement to the contrary notwithstanding, the liability of Sellers to
indemnify the Buyer Indemnified Parties pursuant to Sections 10.3(d) and
10.4(d), to the extent such indemnities cover Environmental Costs that are
attributable to environmental conditions that are not disclosed in Section
3.20 of the Disclosure
----------
-36-
Schedule, and Sections 10.3(e) and 10.4(e) hereof shall not apply to one-half
- -------
of any Damages up to $8 million aggregate amount of such Damages that would,
but for this Section 10.5, be covered by such indemnification provisions.
10.6 Buyer's Agreement to Indemnify. Upon the terms and subject to
conditions of this Article X, Buyer agrees to indemnify, defend and hold
harmless the Company (only if the Closing does not occur), its Subsidiaries
(only if the Closing does not occur), Sellers, Parents and their respective
officers, directors, employees, agents and representatives (collectively, the
"Seller Indemnified Parties"), at any time after the date of this Agreement,
from and against all Damages suffered or incurred by the Seller Indemnified
Parties that are attributable to or result from:
(a) the breach by Buyer of any Surviving Representations;
(b) the breach of any covenant or agreement of Buyer contained in
this Agreement;
(c) any death, personal injury or property damage suffered by Buyer
or Buyer's officers, directors, employees or agents that results from or is
attributable to the conduct by Buyer or its representatives or agents of
Buyer's due diligence investigation of the Company and its Subsidiaries,
INCLUDING ANY CLAIMS BASED UPON THE NEGLIGENCE OR ALLEGED NEGLIGENCE OF ANY
SELLERS INDEMNIFIED PARTIES;
(d) if the Closing occurs, any act, omission or condition created
after April 1, 1987, arising out of or attributable to the ownership or
operation of the businesses, assets and properties that are owned by Buyer,
the Company or the Subsidiaries on the Closing Date (the "Continuing
Operations"), including, but not limited to the following matters, in each
case solely to the extent same relate to the Continuing Operations, (i) any
product liability or breach of warranty claim arising out of products
manufactured or services sold, delivered or performed after April 1, 1987,
(ii) any new environmental facilities required to be installed after the
Closing, (iii) all costs of dismantling, cleaning out and disposing of
buildings, machinery and equipment upon complete or partial discontinuance of
operations and (iv) all matters disclosed in the Disclosure Schedule,
-------------------
including environmental conditions;
(e) to the extent and only to the extent attributable to matters
contained in the Disclosure Schedule, any Damages (which shall include,
-------------------
without limitation, Environmental Costs) incurred by any Seller Indemnified
Party arising out of businesses, assets or properties owned, leased or
operated after April 1, 1987, by the Company or any Subsidiary, which
businesses or properties were disposed of or discontinued prior to the
Closing; and
(f) to the extent and only to the extent attributable to the
environmental conditions that are disclosed in Section 3.20 of the Disclosure
----------
Schedule, any Environmental Costs incurred
- --------
-37-
by any Seller Indemnified Party that are attributable to or result from any
conditions existing as of April 1, 1987, on any assets or properties
contributed to the Company or any Subsidiary by Sellers;
provided, however, that Buyer's indemnity obligation under this Section 10.6
shall not extend to any Tax Losses or Damages for which Sellers have agreed to
indemnify the Buyer Indemnified Parties pursuant to Sections 6.1(d), 10.3 and
10.4 above.
10.7 Conditions of Indemnification. The obligations and liabilities
of Sellers, Parents and Buyer with respect to demands, claims, actions, causes
of action or assessments made by third parties ("Claims") that are covered by
the indemnification provisions of this Agreement shall be subject to the
following terms and conditions:
(a) The indemnified party shall give the indemnifying party prompt
notice of any such Claim, and if the indemnifying party does not dispute its
obligation to indemnify the indemnified party hereunder and confirms same in
writing, the indemnifying party shall have the right to undertake the defense
thereof by representatives chosen by it;
(b) Unless and until the indemnifying party assumes the defense of a
Claim as provided in subparagraph (a) above, the indemnified party shall have
the right to undertake the defense, compromise or settlement of such Claim on
behalf of and for the account and risk of the indemnifying party, subject to
the right of the indemnifying party (provided that it does not dispute its
liability to the indemnified party hereunder for such Claim) to assume the
defense of such Claim at any time prior to settlement, compromise or final
determination thereof; and
(c) Anything in this Article X to the contrary notwithstanding,
(i) if there is a reasonable probability that a Claim may materially and
adversely affect the indemnified party other than as a result of money damages
or other money payments, the indemnified party shall have the right, at its
own cost and expense, to participate in the defense of such Claim, and
(ii) the indemnifying party shall not, without the written consent of the
indemnified party, settle or compromise any Claim or consent to the entry of
any judgment which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the indemnified party of an
unconditional release from all liability in respect to such Claim.
(d) Notwithstanding any provision herein to the contrary, failure of
the indemnified party to give notice required by this Section 10.7 shall not
constitute a waiver of the indemnified party's right to indemnification or a
defense to any indemnification claim by such indemnified party, except to the
extent such failure prejudices the ability of the indemnifying party to defend
against such Claim.
-38-
(e) The indemnified party shall reasonably cooperate with the
indemnifying party, including making available to the indemnifying party all
records, documents, and other things, making available all employees
reasonably necessary to investigate, defend and settle such matter, access to
the Company's or the Subsidiary's properties without cost to the indemnifying
party other than reimbursement of out-of-pocket expenses actually incurred.
10.8 Parent Guarantee. Armco hereby agrees to unconditionally and
absolutely guarantee the due and punctual performance by National Supply of
all of National Supply's obligations hereunder subject to a maximum amount
equal to the total consideration paid by Buyer to National Supply hereunder;
provided, however that such limitation shall not apply to the obligations of
National Supply under Section 6.1(d). USX hereby agrees to unconditionally
and absolutely guarantee the due and punctual performance by Oilwell of all of
Oilwell's obligations hereunder subject to a maximum amount equal to the total
consideration paid by Buyer to Oilwell hereunder; provided, however, that such
limitation shall not apply to the obligations of Oilwell under Section 6.1(d).
Armco and USX agree that this guarantee shall survive and be enforceable
notwithstanding any merger, dissolution, bankruptcy or insolvency of National
Supply or Oilwell, as the case may be.
10.9 Matters Disclosed in Disclosure Schedule. For purposes of
allocating responsibility under the various indemnities contained in this
Article X and notwithstanding anything herein to the contrary, (a) the
disclosure in the Disclosure Schedule of a contract or agreement for the sale
-------------------
of a business or facility shall only constitute disclosure of matters that are
the subject of a specific lawsuit, claim or demand that is disclosed in the
Disclosure Schedule and of matters specifically reserved in the Company's
- -------------------
financial statements and shall not constitute disclosure of any other
lawsuits, claims or demands that are or have been made pursuant to such
contract or agreement; (b) the sale of products or services arising out of the
conduct by the Company or any Subsidiary of the distribution, tubular, pump,
drilling business and other activities conducted by such entities on the date
hereof shall constitute ongoing activities of the Company and the Subsidiaries
(and not businesses or properties that were "disposed of or discontinued" for
purposes of Sections 10.3(e) and 10.4(e)), even if the Company or a Subsidiary
owns but does not currently operate the facility that manufactured, sold or
distributed the product or service involved ; (c) the manufacture of wellhead
products, sucker rods, hydraulic equipment and pumps, down-hole sucker rod
pumps, ball valves for fluid control and centrifugal pumps, and the threading
of pipe by Total Pipe, shall constitute businesses or properties that were
"disposed of or discontinued" within the meaning of Sections 10.3(e) and
10.4(e), provided that the sale by the Company or any Subsidiary of such items
manufactured by third parties shall, to the extent conducted by the Company or
any Subsidiary on the date hereof, constitute ongoing activities of the
Company and the Subsidiaries.
-39-
ARTICLE XI
MISCELLANEOUS
11.1 Further Assurances. From time to time after the Closing Date,
at the request of the other party hereto and at the expense of the party so
requesting, Sellers, Parents and Buyer shall execute and deliver to such
requesting party such documents and take such other action as such requesting
party may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
11.2 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered
personally, by mail (certified or registered mail, return receipt requested)
or by facsimile transmission (receipt of which is confirmed):
(a) If to Buyer, to:
Now Holdings, Inc.
5555 San Felipe
Houston, TX 77056
Attention: Joel V. Staff
Chief Executive Officer
with a copy to:
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2500
Houston, TX 77002-6760
Attention: John S. Watson
(b) If to Armco or National Supply, to:
Armco Inc.
One Oxford Centre
301 Grant Street
Pittsburgh, PA 15219
Attention: David Harmer
Vice President and Chief Financial Officer
with a copy to:
Gary R. Hildreth, Esquire
General Counsel
One Oxford Centre
301 Grant Street
Pittsburgh, PA 15219
-40-
(c) If to USX or Oilwell, to:
USX Corporation
600 Grant Street
Pittsburgh, PA 15219-2749
Attention: C. C. Gedeon
Executive Vice President
Raw Materials and Diversified Businesses
with a copy to:
Robert M. Stanton, Esquire
General Attorney
USX Corporation
600 Grant Street
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date on which so
hand-delivered, on the third business day following the date on which so
mailed and on the date on which faxed and confirmed, except for a notice of
change of address, which shall be effective only upon receipt thereof.
11.3 Entire Agreement. This Agreement, the Disclosure Schedule and
-------------------
the exhibits, schedules and other documents referred to herein which form a
part hereof (including, without limitation, the Confidentiality Agreement
referred to in Section 5.2 hereof) contain the entire understanding of the
parties hereto with respect to their subject matter. This Agreement
supersedes all prior agreements and understandings, oral and written, with
respect to its subject matter, including, without limitation the letter dated
May 17, 1995.
11.4 Severability. Should any provision of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect
the validity or enforceability of any of the other provisions of this
Agreement, which other provisions shall remain in full force and effect and
the application of such invalid or unenforceable provision to persons or
circumstances other than those as to which it is held invalid or unenforceable
shall be valid and be enforced to the fullest extent permitted by law.
11.5 Binding Effect: Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, successors and assigns;
provided, however, that prior to Closing, no party hereto may assign its
rights or obligations hereunder to any other person or entity, except that
Buyer may (a) assign its rights and obligations hereunder to an affiliate of
Buyer and (b) grant such security interests and/or effect such collateral
assignments as may be necessary to obtain financing for the transactions
contemplated hereunder..
-41-
11.6 Third-Party Beneficiaries. This Agreement is not intended and
shall not be deemed to confer upon or give any person except the parties
hereto and their respective successors and assigns any remedy, claim,
liability, reimbursement, cause of action or other right under or by reason of
this Agreement.
11.7 Counterparts. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.8 Interpretation. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, the term
"person" shall mean and include an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization and a government or any
department or agency thereof. As used in this Agreement, the term "affiliate"
shall have the meaning set forth in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
11.9 Governing Law. This Agreement shall be governed by the internal
laws of the State of Delaware, without regard to the principles of conflicts
of law thereof that would require the application of the laws of any
jurisdiction other than Delaware.
11.10 Certain Waivers. Each Seller hereby waives its right of first
refusal granted by Section 13.2 of the Partnership Agreement of the Company
and the corresponding right found in the articles of incorporation of the
other partner.
-42-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
BUYER:
NOW HOLDINGS, INC.
By: /s/ W. McComb Dunwoody
-----------------------------
Name: W. McComb Dunwoody
Title: President
SELLER:
OILWELL INC.
By: /s/ C. C. Gedeon
-----------------------------
Name: C. C. Gedeon
Title: President
NATIONAL SUPPLY COMPANY, INC.
By: /s/ Gary R. Hildreth
-----------------------------
Name: Gary R. Hildreth
-----------------------------
Title: Vice President
-----------------------------
PARENT:
USX CORPORATION
By: /s/ C. C. Gedeon
-----------------------------
Name: C. C. Gedeon
Title: Executive Vice President
Raw Materials and Diversified
Business
ARMCO INC.
By: /s/ David G. Harmer
-----------------------------
Name: David G. Harmer
-----------------------------
Title: Corporate Vice President
-----------------------------
NOW HOLDINGS, INC.
666 Steamboat Road
Greenwich, CT 06830
September 22, 1995
USX Corporation
Oilwell, Inc.
600 Grant Street
Pittsburgh, Pennsylvania 15219
Attn: Mr. Robert M. Stanton
Armco Inc.
National Supply Company, Inc.
301 Grant Street, 15th Floor
One Oxford Centre
Pittsburgh, PA 15219-1415
Attn: Mr. Gary R. Hildreth
Gentlemen:
Reference is hereby made to that certain Purchase Agreement (the
"Purchase Agreement") of even date herewith among Oilwell, Inc., USX
Corporation, National Supply Company, Inc., Armco Inc. and NOW Holdings, Inc.,
all Delaware corporations. Any capitalized term used herein but not defined
shall have the meanings given such term in the Purchase Agreement.
The purpose of this letter is to set forth the following agreements among
Sellers, Parents and Buyer:
1. Sellers, Parents and Buyer (i) acknowledge that the Disclosure
Schedule contemplated by Section 3.2 of the Purchase Agreement has not been
delivered by Sellers to Buyer concurrently with the execution of the Purchase
Agreement and (ii) agree that the Disclosure Schedule shall instead be
delivered as provided in this letter.
2. Sellers Parents and Buyer shall use their best efforts to finalize
and agree upon the Disclosure Schedule on or before October 6, 1995; and
3. Upon the completion of the Disclosure Schedule to the mutual
satisfaction of Sellers, Parents and Buyer, each Seller, each Parent and Buyer
shall acknowledge such agreement in writing and the Disclosure Schedule shall
thereupon be deemed to be
USX Corporation and Armco, Inc.
September 22, 1995
Page 2
a part of the Purchase Agreement as fully as if same had been delivered by
Sellers to Buyer on the date hereof.
If you are in agreement with the foregoing, please indicate such
agreement by executing each of the enclosed counterparts of this letter in the
space provided below. This letter may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
BUYER:
NOW HOLDINGS, INC.
By: /s/ W. McComb Dunwoody
-----------------------------
W. McComb Dunwoody
President
ACCEPTED and AGREED on this
day of , 1995 by:
- -------- ----------
SELLERS: PARENTS:
OILWELL, INC. USX CORPORATION
By: /s/ C. C. Gedeon By: /s/ C. C. Gedeon
------------------------ -----------------------------
President Executive Vice President
Raw Materials and Business
Development
NATIONAL SUPPLY COMPANY, INC. ARMCO INC.
By: /s/ Gary R. Hildreth By: /s/ David G. Harmer
---------------------- -----------------------------
Name: Gary R. Hildreth Name: David G. Harmer
---------------------- -----------------------
Title: Vice President Title: Vice President
------------------- ---------------------
December 4, 1995
W. McComb Dunwoody
President
NOW Holdings, Inc.
666 Steamboat Road
Greenwich, CT 06830
Re: Amendment No. 1 to Purchase Agreement by and among
Oilwell, Inc., National Supply Company, Inc., USX Corporation,
Armco Inc. and NOW Holdings, Inc., dated as of September 22, 1995
-----------------------------------------------------------------
Dear Mr. Dunwoody:
This letter will confirm prior discussion and agreement with you and your
representatives and when fully signed and acknowledged by the parties, will
constitute Amendment No. 1 to the subject Purchase Agreement.
Accordingly, the subject Purchase Agreement shall be amended in the
following particulars:
A. Section 9.1(b) of Article IX, Termination, Amendment and Waiver,
shall be revised as follows:
(b) at any time after January 17, 1996 by either Sellers or
Buyer, if the Closing shall not have occurred for any reason, other than a
breach of this Agreement by the terminating party, which shall extend the
termination date until such breach is cured.
Even though the termination date has been extended by this Amendment No.
1 to January 17, 1996, we currently intend for the Closing to take place on
January 4, 1996, to be effective as of January 1, 1996.
If you concur with the above amendment, please so indicate by signing in
the space provided below and return one executed copy to Armco Inc./National
Supply Company, Inc. and one executed copy to USX Corporation/Oilwell, Inc.;
the original is for your file.
Very truly yours,
Armco Inc. USX Corporation
By /s/ David G. Harmer By /s/ C. C. Gedeon
--------------------------- ------------------------------
National Supply Company, Inc. Oilwell, Inc.
By /s/ Gary R. Hildreth By /s/ C. C. Gedeon
--------------------------- ------------------------------
ACKNOWLEDGED AND AGREED:
NOW Holdings, Inc.
By /s/ W. McComb Dunwoody
---------------------------
NOW HOLDINGS, INC.
666 Steamboat Road
Greenwich, CT 06830
January 15, 1996
Mr. C.C. Gedeon
Executive Vice President
Raw Materials and Diversified Businesses
USX Corporation
600 Grant Street
Pittsburgh, Pennsylvania 15219-2749
Mr. David G. Harmer
Corporate Vice President and
Chief Financial Officer
Armco, Inc.
301 Grant Street, 15th Floor
One Oxford Centre
Pittsburgh, PA 15219-1415
Re: Purchase Agreement ("Purchase Agreement") dated September 22, 1995
for the Acquisition of National-Oilwell
Gentlemen:
This letter sets forth agreements that we have reached with respect to
certain matters contained in the Purchase Agreement as follows:
1. The Purchase Agreement reflects that NOW, Holdings, Inc., a
Delaware corporation ("Holdings"), is the Buyer. As permitted by Section 11.5
of the Purchase Agreement, Holdings has assigned its rights as Buyer under the
Purchase Agreement to National-Oilwell, Inc., a Delaware corporation ("GP"),
NATOIL, a Delaware corporation ("LP"), and NOW International, Inc., a Delaware
corporation ("International"), and GP, LP and International shall be entitled
to all of the rights of Buyer under the Purchase Agreement and shall assume
and perform all of Buyer's obligations under the Purchase Agreement. In
addition, from and after the closing, the term Buyer shall mean collectively,
Holdings, GP, International and the Company and each of Holdings, GP,
International, the Company shall be entitled to all of the rights of Buyer
under the Purchase Agreement and shall perform all of Buyer's obligations
under the Purchase Agreement.
2. The Purchase Agreement also reflects that Buyer will purchase from
Sellers and Sellers shall assign and transfer to Buyer all of the general
partnership interest in National-Oilwell, a Delaware general partnership. At
the request of Buyer, Sellers have converted National-Oilwell into a Delaware
limited partnership under the name of National-Oilwell, L.P. by executing an
amendment to the Partnership Agreement of National-Oilwell in the form of
Exhibit A attached hereto and by executing and filing with the Delaware
Secretary of State of Certificate of Limited Partnership of National-Oilwell,
L.P. in the form of Exhibit B attached hereto. At closing, Sellers shall
assign and transfer to LP all of their interest as a limited partner in
National-Oilwell, L.P. and
Messrs. Gedeon and Harmer
Page 2
January 15, 1996
admit LP as a limited partner of National-Oilwell, L.P., and shall then assign
and transfer all of their interest as a general partner in National-Oilwell,
L.P. to GP and withdraw as partners from National-Oilwell, L.P. All costs of
filing the Certificate of Limited Partnership shall be borne by Buyer. Buyer
may, at its sole cost, cause the limited partnership to be qualified to do
business in such jurisdictions as the Buyer desires. In the event that the
Closing does not occur, for whatever reason, Buyer shall reimburse Sellers all
costs reasonably incurred in re-establishing the Company as a Delaware general
partnership. The assignments referred to in this paragraph 2 shall be in the
form of Exhibits C-2 through C-4 attached hereto.
3. The Purchase Agreement also reflects that Buyer will purchase from
Sellers and Sellers will assign and transfer to Buyer all of the issued and
outstanding capital stock of National-Oilwell Pty, Ltd., an Australian
corporation ("NOW Australia"), and National-Oilwell, Pte. Ltd., a Singapore
corporation ("NOW Singapore"). At closing, Sellers shall assign and transfer
to International all of the issued and outstanding capital stock of NOW
Australia and NOW Singapore.
4. The form of Subordinated Note attached as Exhibit L to the
Purchase Agreement shall be amended to reflect the new structure set forth in
this Letter Agreement and the fact that National-Oilwell, L.P. will be the
Borrower under the debt financing documents. The form of the new Subordinated
Note is attached hereto as Exhibit D.
5. Section 3.3 of the Purchase Agreement is amended and restated to
read in its entirety as set forth below:
"3.3 ORGANIZATION AND QUALIFICATION OF THE COMPANY. Until
the conversion of the Company into a limited partnership, the Company was (a)
a general partnership duly formed and validly existing under the laws of the
State of Delaware and had all requisite power and authority to own, lease and
operate its properties and to conduct its business as it was being conducted,
and (b) duly qualified or licensed to do business and was in good standing in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary. No
representation is made concerning the conversion of the Company into a limited
partnership
The Company has heretofore delivered to Buyer complete and
correct copies of the partnership agreement of the Company, as currently in
effect."
6. Section 3.6 of the Purchase Agreement shall be amended by adding
the following at the end of the current section:
"For purposes of this Section 3.6, the parties have
assumed that, immediately after the Closing, National-Oilwell, L.P. shall be
the same legal entity as the Company on the date hereof."
7. Section 3.14(g)(i) and (ii) of the Purchase Agreement are hereby
amended and restated in their entirety as follows:
Messrs. Gedeon and Harmer
Page 3
January 15, 1996
"(i) involves sales of products of the Company and its
Subsidiaries, or purchases by the Company and the Subsidiaries of products and
services, in excess of $500,000, (ii) involves future expenditures in excess
of $200,000 in any one calendar year, and is not terminable by the Company or
the Subsidiary of 30 days' or fewer notice without penalty, or"
8. The term "Material Contracts" as defined in the Purchase Agreement
shall not include maintenance and repair operating supply contracts that are
cancellable by the Company on less than 90 days notice.
9. Exhibit C to the Purchase Agreement, labelled "Allocation of
Purchase Price", shall be deleted in its entirety and replaced by a new
Exhibit C to the Purchase Agreement in the form attached hereto as Exhibit E.
10. The closing of the transactions contemplated by the Purchase
Agreement shall be effective as of January 1, 1996.
11. Effective as of the Closing, the Asset Transfer Agreement dated
March 31, 1987 between National Supply Company, Inc. and the Company and the
Asset Transfer Agreement dated March 31, 1987 between Oilwell, Inc. And the
Company shall terminate. All representations, warranties, covenants,
indemnifications and other provisions of the Purchase Agreement shall remain
in effect and govern the relationship between the parties.
If this letter correctly sets forth our agreement on the matters set
forth herein, please execute three copies of this letter in the spaces
provided below. One copy should be returned to each of the other two parties;
the third copy is for your files.
Very truly yours,
NOW HOLDINGS, INC.
By: /s/ W. McComb Dunwoody
---------------------------------
Messrs. Gedeon and Harmer
Page 4
January 15, 1996
ACCEPTED AND AGREED TO:
USX CORPORATION OILWELL, INC.
By: /s/ C. C. Gedeon By: /s/ G. F. Hurley
------------ --------------------------
C.C. Gedeon Name: G. F. Hurley
Executive Vice President --------------------------
Raw Materials and Diversified Business Title: Vice President &
Comptroller
----------------------------
ARMCO INC. NATIONAL SUPPLY COMPANY, INC.
By: /s/David G. Harmer By: /s/ Gary R. Hildreth
--------------------------- -----------------------
Name: David G. Harmer Name: Gary R. Hildreth
------------------------ ----------------------
Title: Corporate Vice President and Title: Vice President
Chief Financial Officer ---------------------