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EXHIBIT 10.21
COOPERATION AGREEMENT
THIS AGREEMENT, made the 16th day of January, 1997, between
WARTSILA DIESEL INTERNATIONAL LTD. OY, a company organized and existing under
the laws of Finland, having its principal office at Pitkansillanranta 3A - XX
Xxx 000, 00000 Xxxxxxxx, Xxxxxxx,(xxxxxxxxxxx called "WD"),
as the first party, and
HANOVER COMPRESSOR COMPANY, a company organized under the laws of the state of
Delaware (hereinafter called "HCC")
as the second party, and
WARTSILA COMPRESSION SYSTEMS GMBH, a corporation organized and existing under
the laws of Germany (hereinafter called "WCS")
as the third party.
WHEREAS, WD has been and continues to be engaged in the business of,
and has considerable experience in, the design, manufacturing, marketing,
sales, and servicing of diesel and gas engines that are used as or for, among
other things, main and auxiliary ship engines, land-based power plants,
traction applications, and pump and compressor applications;
WHEREAS, Wartsila Compression Systems GmbH ("WCS"), a corporation
organized under the laws of Germany and wholly owned by WD, is in the business
of engineering, developing, marketing, and selling gas compression systems
driven by engines of varying sizes manufactured by WD or one or more of its
affiliates, as well as performing maintenance services;
WHEREAS, HCC has been and continues to be engaged in the business of
providing gas rental and fabrication service and oil and natural gas production
equipment essential to the production, processing and transportation of natural
gas including the leasing, maintaining and operating of gas compressors the
fabrication of such compressors and the fabrication of oil and gas production
equipment;
WHEREAS, on 11th of July, 1996, WD and HCC executed a Memorandum of
Understanding, setting forth their intentions with respect to their commercial
relationship regarding gas compression's systems driven by Wartsila Diesel
engines; and
WHEREAS, WD, WCS, and HCC each wish to memorialize such commercial
relationship by this Cooperation Agreement;
NOW THEREFORE, in consideration of the premises and covenants herein
contained the parties hereto hereby agree as follows:
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1. MISSION STATEMENT.
The objective of this Cooperation Agreement is to build a
strong commercial relationship among WD, WCS, and HCC that will be devoted to
engineering, development, marketing, and sale of gas compression systems driven
by engines of varying sizes manufactured by WD or one or more of its affiliates
as well as to the maintenance services for the above.
2. COOPERATION.
2.1 GENERAL.
The parties to this Cooperation Agreement agree to use their
reasonable best efforts to cooperate with one another to
achieve the objective generally set forth in Article 1
hereinabove and described more particularly in the articles
hereinbelow.
2.2 HCC PURCHASE OF WCS STOCK.
Upon execution of this Cooperation Agreement WD and HCC shall
enter into (a) a stock purchase agreement (Appendix 1)
pursuant to which WD shall sell 33% of its equity interest in
WCS to HCC, which shall set forth the terms of such sale, and
(b) into a Shareholders Agreement (Appendix 2) which shall
regulate the respective roles of WD and HCC in respect of the
ownership and management of WCS.
2.3 Expect as provided in this Agreement or any other Agreement
referred to herein each of the Parties shall have the right to
pursue their own business activities whether or not such
activities are competitive with any other Party.
Notwithstanding the foregoing, during the term of the
Distributorship Agreement and for a period of two years
thereafter, neither WD nor WCS, nor any of their affiliates
shall own an interest in an entity engaging in or engage
themselves in the leasing of gas compressor packages in the
"Territory" as a substantial business, as such term is defined
in the Distributorship Agreement. However, the above shall
not apply in the event HCC takes over WCS as a result of a
deadlock pursuant to article 4.8 of the Shareholders
Agreement.
2.4 TECHNICAL COOPERATION.
2.4.1 TECHNOLOGY AND DEVELOPMENT OF KNOW-HOW.
2.4.1.1 Development of standard gas compression drive packages.
2.4.1.1.1 Immediately upon execution of this Agreement, WD, WCS and HCC
shall jointly take such steps as reasonably necessary to
develop and engineer standard gas compression drive
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packages for use with the following WD engines: X00XX, X00XX,
X00XX, W180SG and W220SG.
2.4.1.1.2 The intent of this article is to enable WCS to minimize
engineering and development costs by pre- engineering and
pre-developing packaged gas compression drive systems for use
with the aforementioned standard-sized WD engines.
2.4.1.1.3 In the event the financial resources of WCS are or become
insufficient to effectuate the purposes of this Articles, WD
and HCC may agree to contribute additional capital, that may
be necessary to accomplish the purposes of this article. Such
additional contributions shall be in direct proportion to the
equity interests held by WD and HCC in WCS at the time of such
additional contributions.
2.4.2 INTELLECTUAL PROPERTY RIGHTS.
2.4.2.1 The know-how required for all pre-engineered and pre-developed
packages for gas compression drive systems shall be made
available by WD and HCC for use by WCS without charge. Any
know-how developed by WCS shall be the property of WCS, WD and
HCC.
2.4.2.2 WCS shall have the exclusive right to apply for and obtain
patents anywhere in the world for all inventions and
innovations resulting from work or experimentation by WCS
employees, provided that each of WD and HCC (and any of their
affiliates) shall be granted the non-exclusive, perpetual,
royalty-free licenses to use such patents.
2.4.2.3 All WD engines sold and/or distributed by or through WCS or
HCC shall prominently display the engine name and the name,
"Wartsila Diesel" and/or Wartsila or another name provided by
WD on the exterior of such engines where such name(s) are
readily visible.
2.4.3 TRAINING AND EDUCATION.
2.4.3.1 Within a reasonable time after execution of this Cooperation
Agreement, and from time to time, and at such places or via
such telecommunication systems as are mutually acceptable, the
parties hereto shall conduct whatever educational seminars and
training sessions that may be necessary to educate WCS and/or
HCC processing technology for using low grade natural gas in
gas compression systems.
2.4.3.2 Within a reasonable time after execution of this Cooperation
Agreement, and from time to time, and at such places or via
such telecommunication systems as are mutually acceptable, the
parties hereto shall conduct whatever educational seminars and
training sessions that may be necessary to educate WCS and/or
HCC personnel
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about diesel/gas engine technology for gas compression
systems.
2.4.3.3 Within a reasonable time after execution of this Cooperation
Agreement, and from time to time HCC shall prepare related
written and/or audio-visual materials for the purpose of
educating WCS and/or WD personnel about bidding tools,
developing technical solutions and gas compression marketing
materials.
2.4.4 TASK FORCE.
2.4.4.1 Within a reasonable time after execution of this Cooperation
Agreement and at such places or via such communication systems
as are mutually acceptable, WCS, WD and HCC shall form a task
force for the purpose of discussing technical and
developmental issues that may have arisen from the market in
the previous year in connection with WCS's involvement in the
gas compression drive business.
2.4.4.2 The first such task force shall meet within one year of the
date of the execution of this Cooperation Agreement.
Subsequent annual task forces shall be formed when necessary
upon the initiative of any of the parties hereto.
2.4.4.3 In addition to the annual task force meeting, the parties
hereto expressly agree to participate in such other meetings
as may become necessary, from time to time.
2.5 TOOLING AND INFORMATION.
2.5.1 After execution of this Cooperation Agreement, HCC shall
prepare and provide WCS with all bidding tooling, related
computer software, testing methods operation data, and other
technical and/or engineering methods which WCS may reasonably
need in the ordinary course of its business.
2.5.2 In accordance with the objectives of this Cooperation
Agreement, the parties hereto agree that HCC shall provide WCS
with such information, software programs, packaging know-how,
and other data as WCS may reasonably need from time to time in
the ordinary course of its business.
2.5.3 In accordance with the objectives of this Cooperation
Agreement, the parties agree that WD shall provide WCS with
such information, technical specifications and other data on
its products as WCS may reasonably need from time to time in
the ordinary course of its business.
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2.5.4 Parties shall also, upon WCS's request but at such times and
at such places or via such telecommunication systems as are
mutually convenient, conduct seminars and training sessions,
and prepare related written and/or audio-visual materials, for
the purpose of educating WCS personnel about such tooling,
computer software, computer hardware, testing methods, and
other technical, scientific, and/or engineering equipment.
2.6 MARKETING COOPERATION.
2.6.1 THE ROLE OF WCS.
2.6.1.1 The purpose of WCS shall be to engineer, develop, market and
sell gas compression systems driven by electric motors and/or
engines of varying sizes manufactured by WD or one or more of
its affiliates as well as perform maintenance services.
2.6.1.2 WCS shall market, distribute and sell such gas compression
systems under its own name or under a name of its choosing.
2.6.2 MARKETING INFORMATION.
2.6.2.1 Upon execution of this Cooperation Agreement, HCC and WD shall
freely exchange, without cost to either party, marketing
information relevant to the sale and distribution of WCS gas
compression systems.
2.7 PERSONNEL EXCHANGE.
2.7.1 Upon execution of this Cooperation Agreement, HCC, WCS and WD
shall establish and implement a personnel exchange program
pursuant to which, (a) one or more HCC employees shall be
tasked to visit, observe, and/or work at those certain
facilities and/or offices of WCS, and (b) one or more WD or
WCS employees shall be tasked to visit, observe, and/or work
at those certain facilities and/or offices of HCC.
2.7.2 The duration, purpose, and agenda of each such personnel
exchange shall be determined by mutual agreement of the
parties. However, the parties hereto agree that (a) at least
one WCS sales engineer shall be located at the offices of HCC
in Houston, at the cost of WCS, and (b) at least one HCC
technical expert shall be located at the offices of WCS in
Brandenburg, Germany, at the cost of WCS.
2.7.3 No party shall hire or solicit for hire employees of any other
party without such party's consent. This provision shall
survive for two years after either of the parties
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has been bought out of WCS pursuant to article four or five
the Shareholders Agreement.
2.8 DISTRIBUTION AGREEMENT.
2.8.1 Upon execution of the Cooperation Agreement, WCS and HCC shall
enter into a Distribution Agreement (Appendix 3) (a) pursuant
to which WCS shall grant to HCC the right to be the exclusive
distributor of X00XX, X00XX, X00XX lean burn gas engines, and
a non-exclusive distributor of W220SG and W180SG lean burn gas
engines, for compression drive applications in North-America
and South-America, with the exception of Canada, and (b) which
shall set forth the terms and conditions of such
distributorship arrangement.
WD agrees to be bound by articles 1.1 and 7.3 of the
Distributorship Agreement as if W D were Grantor.
2.9 PILOT INSTALLATIONS.
2.9.1 The parties agree that WCS shall purchase and HCC shall commit
to engineer, package, and put into operation (through HCC's
rental fleet or by third-party purchasers), five pilot gas
compression drive systems using Xxxxxxxx X00XX, X00XX, X00XX,
W220SG, and W180SG lean burn gas engines, which pilot
installations are intended to provide Initial operational and
servicing experience. WD intends to but does not represent or
warrant that it will put the aforementioned installations into
service in the order in which such installations are described
hereinabove. However, WD shall grant a warranty which is not
less favorable than the warranty generally granted to other
customers. The parties agree to cooperate and share technical
knowledge for the co-development, engineering, and packaging
of compression drive systems. The parties also agree to
cooperate and share technical knowledge for the co-development
of compression drive system production methodology or
methodologies. The parties shall enter into a separate
agreement regarding the pilot projects.
3. SALES.
3.1 SALES BETWEEN THE PARTIES.
The parties shall enter into agreements for the purchase and
sale of packaging components, engines and gas compression
packages from time to time.
3.2 TERMS AND CONDITIONS OF SALES BETWEEN THE PARTIES.
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The sales agreement between the parties will be governed by
the terms and conditions as per Appendix 4.
The sales of engines by WCS to HCC shall be governed also by
the Distributorship Agreement referred into article 2.8.
4. REPRESENTATIONS.
4.1 HCC REPRESENTATIONS.
HCC hereby represents and covenants that:
4.1.1 It has full authority and capacity to enter into this
Co-operation Agreement and to execute all related documents;
4.1.2 Its certificate of incorporation, by-laws, and any other
documents relating to its corporate governance or to financing
do not restrict it or in any way prevent it from entering into
this Co-operation Agreement;
4.1.3 Its Board of Directors has duly authorized the undersigned HCC
officer(s) to execute this Co-operation Agreement on behalf of
HCC so as to bind HCC to all terms and provisions of this
Co-operation Agreement.
4.1.4 The representations set forth in this Article shall survive
the expiration of this Co-operation Agreement.
4.2 WD REPRESENTATIONS.
WD hereby represents and covenants that:
4.2.1 It has the full authority and capacity to enter into this
Co-operation Agreement and to execute all related documents;
4.2.2 Its certificate of incorporation, by-laws, and any other
documents relating to its corporate governance or to financing
do not restrict it or in any way prevent it from entering into
this Co-operation Agreement;
4.2.3 Its Board of Directors has duly authorized the undersigned WD
officer(s) to execute this Co-operation Agreement on behalf of
WD so as to bind WD to all terms and provisions of this
Co-operation Agreement.
4.2.4 The representations set forth in this Article shall survive
the expiration of this Co-operation Agreement.
4.3 WCS REPRESENTATIONS.
WCS hereby represents and covenants that:
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4.3.1 It has the full authority and capacity to enter into this
Co-operation Agreement and to execute all related documents;
4.3.2 Its certificate of incorporation, by-laws, and any other
documents relating to its corporate governance or to financing
do not restrict or prevent it in any way from entering into
this Co-operation Agreement.
4.3.3 The representations set forth in this Article shall survive
the expiration of this Co-operation Agreement.
5. SUCCESSORS AND ASSIGNS.
5.1 All of the provisions of this Co-operation Agreement shall
apply in all respects to the successors and assigns of WD, WCS
and HCC, respectively.
6. NO THIRD-PARTY BENEFICIARIES.
6.1 There are no intended third-party beneficiaries of this
Co-operation Agreement.
6.2 The only intended beneficiaries of this Co-operation Agreement
are the parties hereto.
7. ENTIRE AGREEMENT.
7.1 The entire agreement between the parties with respect to the
subject matter hereof is set forth in (a) this Cooperation
Agreement, and (b) the related agreements listed (Appendices
1-4) hereto, which agreements supersede any and all prior
agreements, oral and written, negotiations, and proposed
agreements.
7.2 No term, condition, or provision of this Co-operation
Agreement may be modified, waived or changed in any way except
in writing executed, with the same formalities hereof, by the
party charged with such modification, waiver or change.
8. GOVERNING LAW.
8.1 This Co-operation Agreement and the agreements listed in
Appendices 1-4 hereto, and their interpretation and
performance, shall be governed by the laws of Germany.
9. NEGOTIATION OF DISPUTES AND DISAGREEMENTS.
9.1 If any dispute or disagreement arises out of, relating to, or
in connection with the implementation or performance of this
Co-operation Agreement, which the parties hereto have been
unable to settle or agree upon within a period of thirty (30)
days after the dispute or
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disagreement arises, each party shall nominate a senior
officer of its management to meet at a mutually agreed time
and place not later than forty five (45) days after the
dispute or disagreement has arisen to attempt in good faith to
resolve such dispute or disagreement.
9.2 Should a resolution of such dispute not be obtained within
fifteen (15) days after the meeting of such senior officers
for such purpose, any party to this Co-operation Agreement may
then by written notice to any other submit the dispute to
arbitration in accordance with the provisions of Article 10
hereto.
9.3 The negotiations contemplated by this Article 9 are an
absolute conditions precedent to the commencement of
arbitration proceedings.
9.4 No arbitration may be commenced in connection with this
Co-operation Agreement unless the negotiations contemplated by
this Article 9 have been undertaken in a good faith attempt to
settle the claim, dispute or controversy.
10. ARBITRATION.
10.1 All claims, dispute and/or controversies arising out of,
relating to, or in connection with this Co- operation
Agreement shall be finally settled under the Rules of
Conciliation and Arbitration of the International Chamber of
Commerce (the "ICC") then in effect
10.2 There shall be three arbitrators, with each parties selecting
one; the third arbitrator, who shall be the chairman of the
panel, shall be selected by the two party-appointed
arbitrators. The ICC shall be empowered to appoint any
arbitrator not named in accordance with the procedure herein.
10.3 The award rendered by the arbitrators shall be final.
10.4 The costs and expenses of the arbitration (including
reasonable attorney's fees) will be borne by the loosing
party, unless the arbitrators determine that it would be
manifestly unfair to honor this Agreement of the parties and
determine a different allocation of costs.
10.5 The arbitration shall be conducted in the English language.
10.6 The place of arbitration shall be London, United Kingdom.
11. NOTICES.
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11.1 Any notice pursuant to this Co-operation Agreement shall be in
writing and either (a) delivered personally; (b) sent by
certified mail, return receipt requested; (c) sent by a
recognized overnight mail or courier service with delivery
receipt required and by regular mail; or (d) sent by confirmed
facsimile transfer and by regular mail:
If to WD: Wartsila Diesel International Ltd Oy
Pitkansillanranta 3A - XX Xxx 000,
00000 Xxxxxxxx, Xxxxxxx
If to WCS: Wartsila Compression Systems GmbH
Xxxxxxxxxxx Xxxx 00-00
X-00000 Xxxxxx
If to HCC: Hanover Compressor Company
00000 X. Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxx 00000
Copy to Xxxx Xxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxxx XX 00000
fax (000) 000-0000
11.2 Any party may change its address or the person to be notified
by a notice delivered in accordance with this Article.
11.3 Notices shall be effective when received by the party to whom
addressed.
12. EFFECTIVENESS.
This agreement and the appendices hereto shall become
effective upon HCC's receipt of its lenders' and Board of
Directors consents to the transactions contemplated hereby;
provided however, that if such consents are not received by
February 15, 1997, this agreement and the agreements attached
hereto as appendices shall be of no force and effect.
13. TERMINATION.
Articles 1 and 2 of this Agreement shall terminate at such
time as either party no longer owns an interest in WCS;
provided, however, that Article 2.3, the last sentence of
Article 2.4.2.1, the previous in article 2.4.2.2, the last
sentence of article 2.8.1 shall survive any such termination.
14. CAPTIONS.
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14.1 The Article headings used in this Co-operation Agreement are
for convenience only. They have no substantive value and
shall not affect the meaning or interpretation of this
Cooperation Agreement.
WARTSILA DIESEL WARTSILA COMPRESSION
INTERNATIONAL LTD OY, SYSTEMS GmbH,
By: By:
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HANOVER COMPRESSOR
COMPANY,
By:
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