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EXHIBIT 10.1
SHARE SALE AGREEMENT
BETWEEN
THE PERSONS WHOSE NAMES AND
ADDRESSES ARE SET OUT IN PART 1A OF
THE SCHEDULE ("THE VENDORS")
AND
XXXXXXXXXXX EURASIA LIMITED, (REG
NO. 2440463) HAVING ITS REGISTERED
OFFICE AT 00/00 XXXXX XXXX, XXXXX
XXXXXXXX, XXXXXXX XX00 0XX ("THE
PURCHASER") AND
XXXXXXXXXXX INTERNATIONAL, INC.
INCORPORATED IN THE STATE OF
DELAWARE, UNITED STATES OF AMERICA
("WEATHERFORD")
WHEREAS:-
(A) Petroline Wellsystems Limited ("the Company") is incorporated in
Scotland (No. 72733) as a private company limited by shares. The
Vendors are the registered holders and (except for the Trustees who
hold their holding of the Sale Shares on trust for the beneficiary or
beneficiaries of the Trust) beneficial owners of the whole of the
issued share capital of the Company.
(B) The Purchaser wishes to purchase and the Vendors wish to sell the whole
of the issued share capital of the Company on the terms and subject to
the conditions set out in this Agreement.
(C) Weatherford has agreed to cause the Purchaser to comply with the terms
of this Agreement and to be jointly and severally responsible for
Purchaser's obligations hereunder.
NOW IT IS HEREBY AGREED as follows:-
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, unless the context shall otherwise require, the
following expressions shall have the following meanings:-
"the Accounts" means the audited consolidated
balance sheet of the Company as at
the Accounts Date and the audited
consolidated profit and loss
account of the Company for the year
ended on the Accounts Date together
with the directors' and auditor's
reports and other documents annexed
thereto;
"the Accounts Date" means 30 November 1998;
"Affiliate" means, with respect to any person
or entity, any other person or
entity that (i) directly or
indirectly controls the first
person or entity, (ii) is directly
or indirectly controlled by the
first person or entity or
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(iii) is under direct or indirect
common control of the first person
or entity.
"in the Agreed Form" in relation to any document, means
in the terms agreed between the
parties and for the purpose of
identification signed by the
Purchaser's Solicitors and the
Vendors' Solicitors;
"Aquatronic" Aquatronic Limited, a company
incorporated in Scotland (No.
180106) details of which are set
out in Section A of Part 2 of the
Schedule;
"Ascari " means Ascari Cars Limited details
of which are given in Part 2 (2) of
the Schedule.
"Associate" means any associate or associated
company as such terms are
respectively defined in Sections
417 and 416 ICTA;
"Astec" means Astec Developments Limited;
"Bank's Security" means the floating charge and
Standard Security granted by the
Company in favour of Bank of
Scotland;
"Business Day" means a day on which banks are open
for business in Aberdeen and
London;
"CA" the Companies Xxx 0000 (as
amended);
"Cash Consideration" means the sum of (pound)20 million.
"Commission" means the United States Securities
and Exchange Commission.
"Completion" means completion of the matters set
out in Clause 5;
"Completion Date" means the date of this Agreement;
"Consideration" means the consideration payable by
the Purchaser to the Vendors for
the Sale Shares as set out in
Clause 4;
"Corporate Restructuring" means the disposal by the Company
of:-
(a) Ascari and IWT;
(b) 45,000 Redeemable Preference
Shares of (pound)1 each in Mere
Engineering Limited; and
(c) certain motor vehicles and
motor cycles prior to the
Completion Date
"Disclosure Letter" means the letter dated of even date
with this Agreement signed by the
Warrantors or by the Vendors'
Solicitors on behalf of the
Warrantors and addressed to and
accepted by the Purchaser and
Weatherford or by the Purchaser's
and Xxxxxxxxxxx'x Solicitors on
behalf of the Purchaser and
Weatherford disclosing:-
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(a) information constituting
exceptions to the Warranties;
and
(b) particulars of other matters
referred to in this Agreement.
"Dormant Subsidiaries" the dormant subsidiaries of the
Company, details of which are set
out in Section B of Part 2 of the
Schedule;
"Expio" Expio Limited, a company
incorporated in Scotland (no.
191747) details of which are set
out in Section A of Part 2 (1) of
the Schedule;
"F.A. or F. (No. 2) A" followed by a stated year, means
the Finance Act or the Finance (No.
2) Act of that year;
"Fair Market Value" means $35.175 peer share of
Weatherford Common Stock;
"the Group Companies" means the Company, the UK
Subsidiaries, Petroline L.L.C and
the Dormant Subsidiaries and "Group
Company" shall mean any of them;
"the Heritable Properties" means the heritable properties
situated in Scotland brief
particulars of which are set out in
Section A of Part 3 of the
Schedule;
"ICTA" means the Income and Corporation
Taxes Xxx 0000;
"IWT" means Independent Well Technology
Limited, details of which are given
in Part 2 (2) of the Schedule;
"Intellectual Property Rights" means all rights to the patents,
including the patents listed in
Part 8 of the Schedule, any patent
rights, inventions, shop rights,
know how, trade secrets, designs,
drawings, art work, plans, prints,
manuals, models, design
registrations, inventor's
certificates, technical information
and data, copyrightable works,
lists of materials, patterns,
moulds, records, diagrams,
formulae, product design standards,
tools, die, jigs, models,
prototypes, product information
literature, computer files,
computer software, hard copy files,
catalogues, specifications,
confidentiality agreements,
confidential information and other
proprietary technology and similar
information; all registered and
unregistered trademarks, service
marks, logos, trade names and all
other trademark rights; all
registered and unregistered
copyrights; and all registrations
for, and applications for
registration of, any of the
foregoing and shall also include
the Group Companies' rights and
know-how as presently constituted
in and to the pipe-slotting
machinery and the know-how as
presently constituted in relation
to the fabrication of the
Expandable Sand Screen;
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"the Leasehold Properties" means the leasehold properties
situated in Scotland brief
particulars of which are set out in
Section B of Part 3 of the
Schedule;
"the Management Accounts" means the unaudited balance sheets
of the Company, QMS and Aquatronic
as at 30 June 1999 and their
unaudited profit and loss account
for the period from the Accounts
Date to 30 June 1999 along with the
unaudited balance sheet and profit
and loss account of Expio for the
period to 31 July 1999, copies of
which form Part 9 of the Schedule;
"Xx Xxxxx" means Klaas Xxxxxxxx Xxxxx, one of
the Vendors;
"Xxx Xxxxx" means Mirjam Xxxxxxx Xxxxx, one of
the Vendors;
"the Non-Scottish Properties" means the properties situated
outwith Scotland owned, leased or
occupied by the Group Companies,
brief particulars of which are set
out in Section C of Part 3 of the
Schedule;
"Permitted Activities" means the business of the provision
and supply of personnel by way of
consultancy services and technical
support to businesses or companies
in the oil and gas industries
excluding any services and advice
with respect to matters involving
the design, manufacture or sale of
oil and gas well completion
products and the provision of
completion services relating
thereto, such activities being
included in the Restricted
Business;
"Petroline L.L.C" means Petroline Wellsystems (USA),
L.L.C, a company incorporated under
the laws of Delaware, USA, details
of which are set out in Section A
of Part 2 (1) of the Schedule;
"the Purchaser's Accountants" means Xxxxxx Xxxxxxxx L.L.P.;
"the Purchaser's Solicitors" means Xxxxxxx Xxxxx W.S., 00 Xxxxxx
Xxxxxx, Xxxxxxxxx XX0 0XX;
"QMS" means Quality Machining Services
Limited, a company incorporated in
Scotland (No. 148435) details of
which are set out in Section A of
Part 2 (1) of the Schedule;
"Registration Rights Undertaking" means the Registration Rights
Undertaking set forth in Annex A
hereto.
"Relevant Proportion" in relation to any obligation of or
claim against a Warrantor pursuant
to this Agreement means the
proportion set against that
Warrantor's name in Part 1B of the
Schedule;
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"Restricted Business" means the businesses of the Group
Companies as carried on at or prior
to Completion (excluding the
Permitted Activities);
"the Sale Shares" means the 5,306,336 Ordinary Shares
of 10p each in the capital of the
Company, being the entire issued
share capital of the Company;
"the Scottish Properties" means the Heritable Properties and
the Leasehold Properties;
"SEC Documents" means Xxxxxxxxxxx'x (a) Annual
Report on Form 10-K for the year
ended December 31, 1998, (b)
Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1999
and June 30, 1999, (c) Current
Reports on Form 8-K dated April 29,
1999, May 27, 1999, July 11, 1999,
and August 16, 1999, and (d) proxy
statement with respect to the
Annual Meeting of Stockholders held
on May 7, 1999.
"the Schedule" means the Schedule in 9 parts
annexed to this Agreement which
shall form part of this Agreement;
"the Securities Act" means the United States Securities
Act of 1933, as amended;
"the Share Option Scheme" means the Inland Revenue approved
employee share option scheme
established by the Company in terms
of Rules of such scheme adopted by
the Company by written resolution
of the members of the Company dated
16 September 1997;
"Shell" means Shell Research Limited, an
English company having an office at
Xxxxx Xxxxxx, Xxxxxx XX0 0XX,
Xxxxxxx, together with Shell's
Affiliates Shell Internationale
Research Maatschappij B.V. and
Shell International Exploration and
Production B.V.
"Shell Licence" means that certain agreement
attached between Shell and
Petroline dated 4th and 15th April
1996;
"Shelf Registration" means the Shelf Registration as
defined in the Registration Rights
Undertaking;
"SSAPs" means Statements of Standard
Accounting Practice;
"Stock Consideration" means that number of whole shares
of Weatherford Common Stock having
a Fair Market Value equal to
(pound)84 million;
"Tax" has the meaning given in the Tax
Undertaking;
"Tax Authority" has the meaning given in the Tax
Undertaking;
"the Tax Undertaking" means the tax undertaking referred
to in Clause 5.2.3 and in the form
set out in Part 6 of the Schedule;
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"TCGA" means the Taxation of Chargeable
Gains Xxx 0000;
"Title Warranties" means the warranties set forth in
Clauses 6.1.1, 6.1.2, 6.1.3 and
6.1.4 of this Agreement and the
warranties set forth in Clauses
2.3, 2.4, 2.5, 6.1, 6.3.1, 6.3.2,
6.3.3, 6.3.5, 6.3.6, 6.3.8, 6.3.9,
6.3.10 and 6.3.11 of Part 4 of the
Schedule.;
"the Trust" means the Fraser X. Xxxxx
Discretionary Trust constituted by
Deed of Trust dated 25 February
1999;
"the Trustees" means Fraser Xxxxxx Xxxxx and P. &
W. Trustees (Aberdeen) Limited as
the trustees of the Fraser X. Xxxxx
Discretionary Trust;
"the UK Subsidiaries" means Aquatronic, Expio and QMS;
"VATA 1994" means the Value Added Tax Xxx 0000;
"the Vendors' Accountants" means Ernst & Young, 00 Xxxxxx
Xxxxxx, Xxxxxxxx XX00 0XX;
"the Vendors' Solicitors" means Xxxxx & Williamsons,
Xxxxxxxxxx Xxxxx, 0 Xxxxx Xxx,
Xxxxxxxx XX00 0XX;
"the Warranties" means the representations,
warranties and undertakings on the
part of the Warrantors set out in
Clause 6 and in Part 4 of the
Schedule and "Warranty" means any
of them;
"the Warrantors" means the individuals listed in
Part 1B of the Schedule;
"Weatherford Shares" means the shares of Weatherford
Common Stock to be issued to the
Vendors as the Stock Consideration
pursuant to this Agreement;
"the Weatherford Common Stock" means the common stock of
Weatherford, $1.00 par value.
1.2 Words and expressions defined in the Companies Xxx 0000 shall bear the
same meanings in this Agreement.
1.3 Unless the context otherwise requires, the masculine gender shall be
deemed to include the feminine and neuter and vice versa and the
singular number shall be deemed to include the plural and vice versa.
1.4 The headings in this Agreement are for convenience of reference only
and shall not affect the construction or interpretation hereof.
1.5 In this Agreement:-
1.5.1 references to any statute or statutory provision shall include
references to such statute or provision as from time to time
amended, extended, re-enacted or consolidated whether before,
on or (in the case of re-enactment or consolidation only)
after the date
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of execution hereof, and shall further include all statutory
instruments or orders made pursuant thereto;
1.5.2 references to Clauses or Sub-clauses or to a Part of the
Schedule are to clauses and sub-clauses of this Agreement or
to parts of the Schedule respectively;
1.5.3 a reference to a person includes a reference to a firm, a body
corporate, an unincorporated association and a statutory or
regulatory authority;
1.5.4 references to any Scottish legal term for any action, remedy,
method of judicial proceeding, legal document, legal status,
court, official or any other legal concept shall in respect of
any jurisdiction other than Scotland be deemed to include what
most nearly approximates in that jurisdiction to the Scottish
legal term.
2. CONDITIONS PRECEDENT TO COMPLETION BY VENDORS
2.1 The obligations of the Vendors to complete the sale and purchase of the
Sale Shares are subject to the satisfaction (or waiver by the Vendors)
of the following conditions:-
2.1.1 Shelf Registration. Weatherford shall have delivered to the
Vendors a draft of the Shelf Registration under the Securities
Act to be filed by Weatherford registering the Weatherford
Shares.
2.1.2 Listing. The Weatherford Shares shall have been accepted for
listing, subject only to issuance, on the New York Stock
Exchange.
2.1.3 Opinion of Counsel. The Vendors shall have received the
favourable opinion, addressed to the Vendors, of Xxxxxxx &
Xxxxx L.L.P., counsel for Weatherford, dated as of the
Completion Date in the form attached hereto as Annex C.
3. SALE AND PURCHASE
3.1 Subject to the terms and conditions of this Agreement, including,
without prejudice to the foregoing generality, the provisions of Part 5
of the Schedule, the Vendors shall sell as beneficial owners (except
for the Trustees who shall sell in their capacity as trustees) and the
Purchaser shall purchase the Sale Shares free from all liens, charges
and encumbrances but together with all rights attaching to them.
3.2 Each of the Vendors hereby waives any rights of pre-emption, which he
may have relating to any of the Sale Shares, whether conferred by the
Articles of Association of the Company or otherwise.
4. CONSIDERATION
4.1 The consideration for the sale and purchase of the Sale Shares shall be
the aggregate of the Cash Consideration and the Stock Consideration
payable in accordance with Clause 5.5.
4.2 The Vendors shall be entitled to the Consideration in the amounts set
out in column 3 of Part 1A of the Schedule.
4.3 Any payment of the Consideration may be made by the Purchaser or the
Purchaser's Solicitors on behalf of the Purchaser to the Vendors'
Solicitors whose receipt thereof shall be full and complete discharge
of the Purchaser, who will not be concerned with the distribution
thereof to and among the Vendors.
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5. COMPLETION
5.1 The sale and purchase of the Sale Shares shall be completed on the
Completion Date at the offices of the Vendors' Solicitors when, subject
to Clause 5.6, all the transactions mentioned in the following
sub-clauses shall take place.
5.2 The Vendors shall, subject to performance by the Purchaser of its
obligations under Clause 5.5 deliver to the Purchaser:-
5.2.1 evidence of the exercise of options by the holders thereof
pursuant to the Share Option Scheme and transfers of shares
resulting therefrom in favour of Klaas Xxxxxxxx Xxxxx, one of
the Vendors;
5.2.2 duly completed and signed transfers in respect of the Sale
Shares in favour of the Purchaser or as it may direct together
with the relative share certificates, or indemnities in
respect thereof;
5.2.3 the Tax Undertaking duly executed by the Warrantors;
5.2.4 the Disclosure Letter duly executed by or on behalf of the
Warrantors;
5.2.5 the statutory books of the Group Companies and their
certificates of incorporation;
5.2.6 if so requested by the Purchaser, a letter from the existing
auditors of the Group Companies resigning their position as
such auditors and containing a statement that there are no
such circumstances as are referred to in Section 394(1) CA;
5.2.7 letters of resignation from office from such of the Directors
of the Group Companies as the Purchaser may request in the
Agreed Form;
5.2.8 a letter of resignation from office from the Secretary of the
Group Companies in the Agreed Form;
5.2.9 the appropriate forms to amend the mandates given by the Group
Companies to their respective bankers;
5.2.10 evidence of the completion of the Corporate Restructuring;
5.2.11 confirmation by Shell that they have no objection to the
Purchaser or Weatherford as the purchaser of the Sale Shares
pursuant to the provisions of Clause 14 (1) of the Shell
Licence;
5.2.12 executed service agreements with Fraser X. Xxxxx, Xxxxxx X.
Xxxxxxxx, Xxxxx Xxxx and Xxxx Xxxxxxxx; and
5.2.13 evidence of the transfer to the Company of all patent and
patent rights held by any of the Vendors or their Affiliates
which are used in the conduct of the business of the Group
Companies.
5.3 The Vendors shall repay all money owing by them to the Group Companies
and the Group Companies shall repay all monies owing by them to the
Vendors or any of their Affiliates or pension schemes whether due for
repayment or not and, except in respect of any obligations of the Group
Companies pursuant to the contracts of employment of Fraser Xxxxxx
Xxxxx and Xxxxxx Xxxxxx Xxxxxxxx, two of the Vendors or pursuant to any
benefits to which any of the Vendors is entitled under the pension
scheme(s) detailed in Part 7 of the Schedule , release the Group
Companies from any continuing liability or obligation to the Vendors.
5.4 The Vendors shall procure that a Board Meeting of the Company shall be
held at which:-
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5.4.1 it shall be resolved that the transfers referred to in Clause
5.2.2, be approved for registration (subject only to their
being duly stamped);
5.4.2 it shall be resolved to accept any resignations required by
the Purchaser in terms of Clause 5.2.7 and the resignation
referred to in Clause 5.2.8;
5.4.3 such persons as the Purchaser may nominate shall be validly
co-opted or appointed as Directors or Secretary of the
Company; and
5.4.4 such firm or company as the Purchaser may nominate shall be
appointed auditors of the Company.
5.5 Upon completion of the matters referred to in Clauses 5.2 to 5.4
inclusive, (and subject to Clause 5.6) the Purchaser or the Purchaser's
Solicitors on behalf of the Purchaser shall
5.5.1 pay the Cash Consideration to the Vendors' Solicitors on
behalf of the Vendors by telegraphic transfer or such other
form of electronic transfer as may be notified to the
Purchaser's Solicitors by the Vendors' Solicitors; and
5.5.2 cause there to be issued to the Vendors the Xxxxxxxxxxx Shares
registered in such name or names as may be requested in
writing by the Vendors and shall deliver certificates to the
Vendors' Solicitors on behalf of the Vendors. No fractional
shares of Weatherford Common Stock shall be issued to the
Vendors and to the extent a fractional share would otherwise
be issued, the number of Weatherford Shares to be issued would
be rounded to the nearest whole.
5.6 The Purchaser may in its absolute discretion waive any requirement
contained in Clauses 5.2 to 5.4 (inclusive).
6. WARRANTIES AND UNDERTAKINGS BY WARRANTORS
6.1 Each of the Warrantors represents, warrants and undertakes to the
Purchaser for his own account only in the Relevant Proportion and not
jointly and severally that as at the date hereof and as at Completion:-
6.1.1 the Sale Shares constitute the whole of the issued and
allotted share capital of the Company;
6.1.2 there is no pledge, lien or other encumbrance on, over or
affecting those of the Sale Shares owned by him and there is
no agreement or arrangement to give or create any such
encumbrance and no claim has been or will be made by any
person to be entitled to any of the foregoing;
6.1.3 each of the Vendors is entitled (in the case of the Trustees
in their capacity as trustees) to transfer the full legal and
beneficial ownership of those of the Sale Shares registered in
his name to the Purchaser on the terms of this Agreement
without the consent of any third party;
6.1.4 the information in Part 1A of the Schedule relating to the
respective holdings of Sale Shares of the Vendors and in Part
2 of the Schedule relating to the Group Companies is true and
accurate;
6.1.5 save as fairly disclosed in the Disclosure Letter, the
Warranties are true and accurate in all respects; and
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6.1.6 Each of the Vendors currently intends to hold the Weatherford
Shares as a purely passive investor and not with the intention
of attempting to influence the basic decisions of Xxxxxxxxxxx
or to participate in the management of Weatherford.
6.2 For the purposes of Clauses 6.1.2 and 6.1.3, the representations,
warranties and undertakings of Fraser X. Xxxxx, one of the Warrantors,
shall be deemed to apply to those of the Sale Shares registered in the
name of Fraser X. Xxxxx and P. & W. Trustees (Aberdeen) Limited as
trustees of the Fraser X. Xxxxx Discretionary Trust.
6.3 Each of the Warranties and the other obligations of the Warrantors in
terms of this Agreement is given and entered into by each Warrantors
for his own account only in the Relevant Proportion and not jointly and
severally and the Purchaser acknowledges and agrees with each of the
Warrantors that their respective liabilities in respect of any claim
for breach of this Agreement (including any claims for breach of the
Warranties or the Tax Undertaking) shall not exceed the Relevant
Proportion of any such claim.
6.4 In relation to any Warranty which refers to the knowledge, information,
awareness or belief of the Warrantors then it shall be deemed, except
where expressly provided otherwise, to include an additional statement
that the Warrantors have made enquiry only of themselves and Xxxxxxx
Xxxxxxxxx, one of the employees of the Company, the Vendors'
Accountants and the Vendors' Solicitors into the subject matter of that
Warranty.
6.5 The Purchaser hereby acknowledges that in entering into this Agreement
it is not relying on any representations, warranties or undertakings
whatsoever and by whomsoever made save for the representations,
warranties and undertakings set out in this Agreement.
6.6 By its execution hereof, the Purchaser hereby irrevocably agrees with
and undertakes to the Warrantors that notwithstanding any other
provisions of this Agreement or any rule of law to the contrary:-
(a) the Disclosure Letter forms and shall be deemed to have formed
part of this Agreement as if its terms were fully set out
mutatis mutandis herein;
(b) the Purchaser has had an opportunity to review all documents
listed in the annexures to the Disclosure Letter.
6.7 The provisions of Part 5 of the Schedule shall apply in respect of each
of the Warranties and (to the extent specified therein) the Tax
Undertaking and/or any claim for breach thereof.
6.8 The Warrantors agree that the Warranties are not and are not to be
affected or limited by any previous or other disclosures express or
implied to the Purchaser, its officers or representatives or
professional advisers (but that always without prejudice to the
provisions of 2 (f) (vii) of Part 5 of the Schedule and the content of
the Disclosure Letter) or by any investigation made by or on behalf of
the Purchaser into the affairs of the Company or any of the UK
Subsidiaries or by any information of which the Purchaser or its agents
have actual or constructive knowledge.
6.9 The Warrantors undertake not to make and warrant that no other person
claiming under or through them will make any claim against the Company
or any of the UK Subsidiaries or any officer or employee thereof on
whom they may have relied before entering into any term of this
Agreement or in the preparation of the Disclosure Letter in respect of
any claim under this Agreement or any omission from or statement in the
Disclosure Letter.
6.10 Xx. Xxxxx hereby agrees to be responsible for and to indemnify the
Purchaser and the Group Companies for any costs, losses, claims,
liabilities and expenses, including reasonable legal fees incurred or
suffered by the Purchaser or any of the Group Companies that arise in
consequence of (a) any Group Company not holding at Completion any
necessary licences
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relating to waste management and (b) the operation of the businesses of
Ascari or IWT or arising out of or relating to the Corporate
Restructuring. Such indemnity shall apply for a period of two years
from the Completion Date and shall thereafter cease to be enforceable
except in respect of any claim thereunder made by the Purchaser or any
of the Group Companies prior to the expiry of the said period and in
respect of which proceedings have been instituted within three months
following the date of such claim. Xx. Xxxxx represents and warrants
that other than pursuant to the Corporate Restructuring or otherwise as
set forth in the Disclosure Letter, no assets of the Group Companies
have been transferred or assigned to him or his Affiliates or
Associates since March 31, 1999.
6.11 None of the Group Companies or their respective Affiliates or
Associates has employed or retained any investment banker, broker,
agent, finder or other party, or incurred any obligation for brokerage
fees, finder's fees or commissions, with respect to the sale by the
Vendors of any of the stock or assets of the Group Companies or with
respect to the transactions contemplated by this Agreement, or
otherwise dealt with anyone purporting to act in the capacity of a
funder or broker with respect thereto whereby such Group Companies or
their Affiliates or Associates may be obligated to pay such a fee or
commission. The Vendors agree that they are responsible and liable for
and will pay any such fees resulting from the sale of the Sale Shares
and that any of such fees are not and will not be an obligation of any
of the Group Companies. The Vendors agree to indemnify and hold the
Purchaser, Weatherford and its Affiliates harmless from and against any
and all claims, liabilities or obligations with respect to all fees,
commissions or expenses asserted by any person on the basis of any act,
statement, agreement or commitment alleged to have been made by any of
the Group Companies or any of the Vendors or any Affiliates or
Affiliate of the Group Companies or any of the Vendors with respect to
any such fee, commission or expense.
6.12 Securities Law Matters:-
6.12.1 The Vendors recognise and understand that the Xxxxxxxxxxx
Shares will not, except as expressly provided in the
Registration Rights Undertaking, be registered under the
Securities Act or under the securities laws of any other
jurisdiction (the "securities laws"). The Xxxxxxxxxxx Shares
are not being so registered in reliance upon exemptions from
the Securities Act and the securities laws which are
predicated, in part, on the representations, warranties and
agreements of the Vendors contained herein.
6.12.2 Each of the Vendors represents and warrants that (i) the
Vendor has business knowledge and experience, such experience
being based on actual participation therein, (ii) the Vendor
is capable of evaluating the merits and risks of an investment
in the Xxxxxxxxxxx Shares and the suitability thereof as an
investment therefor and (iii) the Xxxxxxxxxxx Shares to be
acquired by the Vendor will be acquired solely for investment
and not with a view toward resale or redistribution in
violation of the Securities Act or the securities laws, it
being acknowledged that the Vendors will have the right to
resell the shares as provided in the Registration Rights
Undertaking and any resale or intended resale by them pursuant
to the registration rights provided therein will not be a
breach of this representation.
6.12.3 The Vendors agree that the certificates representing the
Xxxxxxxxxxx Shares will be imprinted with the following
legend, the terms of which are specifically agreed to:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, OR THE SECURITIES LAWS OF ANY
JURISDICTION, IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION
REQUIREMENTS. WITHOUT SUCH REGISTRATION, SUCH SHARES MAY NOT
BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED,
EXCEPT UPON DELIVERY TO THE COMPANY OF AN
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OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED FOR SUCH SALE, PLEDGE,
HYPOTHECATION OR TRANSFER OR THE SUBMISSION TO THE COMPANY OF
SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY TO
THE EFFECT THAT SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER
SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933 OR
APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION
PROMULGATED THEREUNDER.
The Vendors understand and agree that appropriate stop
transfer notations will be placed in the records of
Weatherford and with its transfer agents in respect of the
Xxxxxxxxxxx Shares to be issued to the Vendors. Weatherford
agrees that any Weatherford Shares sold pursuant to an
effective registration statement, including a registration
statement or the Shelf Registration filed pursuant to the
Registration Rights Undertaking, shall have the above legend
removed to permit the closing of the sale within three
Business Days of written notice of the sale and certification
by the Vendors that the sale was made pursuant to the plan of
distribution described in the registration statement or the
Shelf Registration and the prospectus delivery requirements
under the Securities Act were fully complied with in
connection with the sale.
7. WARRANTIES AND UNDERTAKINGS BY THE PURCHASER AND WEATHERFORD;
REGISTRATION RIGHTS; SHARE PRICE PROTECTION
7.1 The Purchaser and Weatherford hereby jointly and severally represent,
warrant and undertake to the Vendors that as at the date hereof and as
at Completion:
7.1.1 Organisation and Qualification. Each of Weatherford and the
Purchaser is a corporation, duly incorporated, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being
conducted.
7.1.2 Articles of Incorporation; By-Laws. Weatherford has furnished
to the Vendors a complete and correct copy of the Articles of
Incorporation and the By-Laws, as amended or restated, of each
of Weatherford and the Purchaser. Neither Weatherford nor the
Purchaser is in violation of any of the provisions of its
Articles of Incorporation or By-Laws.
7.1.3 Capitalisation
(a) As of the date of this Agreement, the authorised
capital stock of Weatherford consists of (i)
250,000,000 shares of Weatherford Common Stock and (ii)
3,000,000 shares of preferred stock, par value $1.00
per share.
(b) At Completion, the Xxxxxxxxxxx Shares will be duly
authorised, validly issued, fully paid and
non-assessable and not subject to adverse claims of
third parties or pre-emptive rights created by statute,
Xxxxxxxxxxx'x Articles of Incorporation or By-Laws or
any agreement to which Weatherford is a party or is
bound. Upon delivery of the Xxxxxxxxxxx Shares at
Completion, the Vendors will own the Xxxxxxxxxxx Shares
free and clear of all adverse claims.
7.1.4 Authority; Enforceability. Each of Weatherford and the
Purchaser has the requisite corporate power and authority to
execute and deliver this Agreement, the Registration Rights
Undertaking and the Tax Undertaking, to perform its
obligations under each such agreement, and to consummate the
transactions contemplated by each such agreement. The
execution and delivery of each agreement, the Registration
Rights
13
Undertaking and the Tax Undertaking by each of Weatherford and
the Purchaser, and the consummation by each of Weatherford and
the Purchaser of the transactions contemplated by each such
agreement, have been duly authorised by all necessary
corporate action and no other corporate proceedings on the
part of Xxxxxxxxxxx or the Purchaser are necessary to
authorise this Agreement, the Registration Rights Undertaking
or the Tax Undertaking or to consummate the transactions
contemplated by each such agreement. This Agreement, the
Registration Rights Undertaking and the Tax Undertaking have
each been duly executed and delivered by each of Weatherford
and the Purchaser and, assuming the due authorisation,
execution and delivery by the Vendors, each constitutes a
legal, valid and binding obligation of Weatherford and the
Purchaser, enforceable against each of them in accordance with
their terms, subject to public policy limitations with respect
to the indemnification provided in the Registration Rights
Undertaking.
7.1.5 No Conflict; Required Filings and Consents
(a) The execution and delivery of this Agreement by
Weatherford and the Purchaser do not, and the
performance of this Agreement by Weatherford and the
Purchaser will not (i) conflict with or violate the
Articles or Certificate of Incorporation or By-Laws or
equivalent organisational documents of Xxxxxxxxxxx or
the Purchaser, or any resolution adopted by the board
of directors or stockholders of Xxxxxxxxxxx or the
Purchaser, (ii) subject to (A) obtaining the consents,
approvals, authorisations and permits of, and making
filings with or notification to, any governmental or
regulatory authority, whether domestic or foreign
("Governmental Entities"), pursuant to the applicable
requirements of any foreign or domestic federal, state
or local law, statute, ordinance, rule, regulation,
order, judgement or decree ("Laws") or of any third
party, and (B) obtaining the consents, approvals,
authorisations and permits of, and making filings with
or notifications to any Governmental Entities pursuant
to the applicable requirements of Law, conflict with or
violate any Laws applicable to Weatherford, the
Purchaser or any of Xxxxxxxxxxx'x subsidiaries or by
which any of their respective properties is bound or
affected; or (iii) result in any breach of or
constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or
give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the
properties or assets of Weatherford, the Purchaser or
any of Xxxxxxxxxxx'x subsidiaries pursuant to, any
note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument
or obligation to which Weatherford, the Purchaser or
any of Xxxxxxxxxxx'x subsidiaries is a party or by
which Weatherford, the Purchaser or any of
Xxxxxxxxxxx'x subsidiaries or any of their respective
properties is bound or affected, except for any such
matters described in clause (ii) or (iii) that would
not have a Weatherford Material Adverse Effect. For
purposes of this Agreement, Weatherford Material
Adverse Effect means any change or effect that,
individually or when taken together with all such other
changes or effects, is or would reasonably be
considered to be materially adverse to the condition,
financial or otherwise, results of operation,
prospects, business, properties, assets or liabilities
of Weatherford and its subsidiaries, taken as a whole.
(b) Based in part on the representations by the Vendors,
the execution and delivery of this Agreement by
Weatherford and the Purchaser do not, and the
performance of this Agreement by Weatherford and the
Purchaser shall not, require any prior consent,
approval, authorisation or permit of, or filing with or
notification to, any Governmental Entities or other
third party in addition to those required to be
disclosed in the Disclosure Letter.
14
7.1.6 Reports; Financial Statements
(a) Since 31 December 1997, Weatherford and its
subsidiaries have filed (i) all forms, reports,
statements, notices and other documents required to be
filed with the Commission (collectively, the
"Xxxxxxxxxxx SEC Reports"). The Xxxxxxxxxxx SEC Reports
were prepared in all material respects in accordance
with the requirements of applicable laws (including the
Securities Act and the Securities Exchange Act of 1934,
as amended, as the case may be). As of their respective
dates, the Xxxxxxxxxxx SEC Reports did not contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements made therein, in light
of the circumstances in which they were made, not
misleading. Since the filing of Xxxxxxxxxxx'x latest
quarterly report on Form 10-Q or current report on Form
8-K filed with the Commission, there has been no
Weatherford Material Adverse Effect that has not been
disclosed through press releases issued by Weatherford.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto)
contained in the Xxxxxxxxxxx SEC Reports (i) has been
prepared in all material respects in accordance with
the published rules and regulations of the SEC and
Generally Accepted Accounting Principles ("GAAP")
applied on a consistent basis throughout the periods
involved (except (x) to the extent required by changes
in GAAP and (y) with respect to Weatherford SEC Reports
filed prior to the date of this Agreement, as may be
indicated in the notes thereto) and (ii) fairly
presents the consolidated financial position of
Weatherford and its subsidiaries as of the respective
dates thereof and the consolidated results of
operations and cash flows for the periods indicated,
except that (A) any unaudited interim financial
statements were or will be subject to normal and
recurring year-end adjustments which were not or are
not expected to be material in amount and (B) any pro
forma financial information contained in such
consolidated financial statements is not or may not be
necessarily indicative of the consolidated financial
position of Weatherford and its subsidiaries as of the
respective dates thereof and the consolidated results
of operations and cash flows for the periods indicated.
7.1.7 Completion; Disclosure. Each of the representations and
warranties set forth in this Clause 7 shall be deemed made at
and as of the date of this Agreement and as at Completion,
except to the extent such representations and warranties
specifically refer to a date other than the date of this
Agreement.
7.1.8 Investment Representations. The Purchaser understands that the
Sale Shares will not have been registered under the Securities
Act, that there is no established market for the Sale Shares,
and that the Sale Shares must be held indefinitely and cannot
be transferred unless an exemption from such registration is
available with respect to such transfer.
7.1.9 Certain Proceedings. There is no pending Proceeding that has
been commenced against Xxxxxxxxxxx or the Purchaser, or
against any of their officers, directors or stockholders in
connection with the affairs of Xxxxxxxxxxx or the Purchaser,
and that challenges, or may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of
the transactions contemplated by the Agreement or that
involves material claims not disclosed in the Weatherford SEC
Reports against Xxxxxxxxxxx or its affiliates. To the
knowledge of Weatherford and the Purchaser, no such Proceeding
has been threatened. For purposes of this Agreement, a
Proceeding means any action, binding arbitration, audit,
hearing, formal investigation, litigation
15
or suit (whether civil, criminal or administrative) commenced,
brought, conducted or heard by or before the Commission.
7.2 Weatherford agrees to register for resale all of the Xxxxxxxxxxx Shares
pursuant to the terms of the Registration Rights Undertaking.
7.3 Weatherford and the Purchaser agree to provide to the Vendors the
following price protection with respect to the Xxxxxxxxxxx Shares:
7.3.1 Subject to the terms of this Clause 7.3, if a Vendor sells any
Weatherford Shares on or before the Protection Termination
Date (which date follows the Completion Date by 365 days plus
such additional number of days following the effectiveness of
the Shelf Registration during which Vendors were not entitled
or not legally permitted to sell Weatherford Shares under the
Shelf Registration) in a bona fide open market transaction to
a person who is not an Affiliate or Associate of any of the
Vendors (a "Resale") at a net sales price per share (after
deducting customary brokerage fees, commissions and discounts
of any brokerage or investment banking firm approved by
Weatherford (a list of approved firms will be provided; such
list will include DLJ, Xxxxxxx Xxxxx, Xxxxxx Xxxxxxx and
Xxxxxx Brothers) that may be assisting in the Resale) ("Net
Sale Price") that is less than $35.175 (the "Floor Price"),
Weatherford and the Purchaser agree to pay such selling Vendor
an amount equal to the number of Weatherford Shares sold in
the Resale multiplied by the difference between the Floor
Price and the Net Sale Price per share (less such brokerage
fees, commissions and discounts) received in the Resale (each
payment referred to above is referred to herein as an
"Additional Payment").
7.3.2 On the fifth Business Day following the receipt by Weatherford
of documentation of a Resale, including a copy of the broker's
transaction report for the Resale which shall include the
gross sales price per Weatherford Share sold in the Resale, an
Additional Payment shall be paid by the Purchaser or
Weatherford to the appropriate selling Vendor by wire transfer
of same day funds (as designated by such Vendor).
7.3.3 If (i) the closing sales price of the Weatherford Common
Stock, as reported by the New York Stock Exchange, is greater
than 120% of the Floor Price for a period of twenty
consecutive trading days subsequent to the date the Shelf
Registration is declared effective by the Commission and (ii)
during the entirety of such twenty consecutive trading days
Vendors were entitled and permitted to sell Weatherford Shares
pursuant to the Shelf Registration, Weatherford and the
Purchaser shall not be obligated to make Additional Payments
for sales of Weatherford Shares made after such period.
7.3.4 For purposes of this Clause 7.3, references to the Weatherford
Common Stock and the Weatherford Shares shall include any
stock, securities, cash or other property that may be received
by a stockholder who held a share of the Common Stock on the
Completion Date in respect of such share and all references to
the market value of the Weatherford Common Stock as of any
date shall mean the sum of the market value of the Weatherford
Common Stock and such other stock, securities, cash or other
property that may be received by a holder of the Weatherford
Common Stock in respect of a share of Weatherford Common Stock
as of the Completion Date. The determination of the value of
any security shall be based on the closing sale price of that
security on the principal stock exchange on which it is listed
if that security is traded on a national securities exchange.
If the principal market in which a security is traded is an
automated trading system, such as NASDAQ, the market value on
any day shall be the average of the high and low bid price for
that security on that day. If any other security or property
is received, its value shall be determined by agreement by a
nationally recognised investment banking firm selected in good
faith by Weatherford. In the event of a reclassification of
the Weatherford Common Stock
16
into a greater or lesser number of shares of Weatherford
Common Stock, all references to numbers of shares of
Weatherford Common Stock and all market prices for the
Weatherford Common Stock, including the Floor Price, shall be
appropriately adjusted to reflect such reclassification.
7.3.5 For purposes of this Clause 7.3, in the event there is a
distribution of any stock, securities, cash or other property
by Weatherford to the Weatherford stockholders, the Floor
Price shall be reduced by the market value (as of the
distribution date) of such stock, securities, cash or other
property so received in respect of a share of the Common Stock
and thereafter if there is a disposition of such stock,
securities or other property by the Vendor who receives the
same, the price protection provided in Clause 7.3.1 shall
apply to any resale of all or part of such stock, securities
or other property, with the Floor Price with respect to such
stock, securities or other property being the market value of
such stock, securities or other property used for reducing the
Floor Price in the first instance. The value of any such
stock, securities or other properties shall be determined and
calculated in the same manner as provided in Clause 7.3.4.
7.3.6 Weatherford is currently contemplating a spin-off of its
drilling products division to its stockholders. A hypothetical
example of adjustments for that spin-off pursuant to Clause
7.3 is set forth in Annex B hereto.
7.4 As used hereinbelow: (i) a "Registration Failure" means that the Shelf
Registration has not been declared effective by the Commission (or if,
having been declared effective, a stop order is issued by the
Commission or other proceedings are brought by the Commission which
prevent sales pursuant to the Shelf Registration on the applicable Put
Date); (ii) First Put Date means the date that is ninety days after the
Completion Date; (iii) Second Put Date means the date that is one
hundred and eighty days after the Completion Date; and (iv) Third Put
Date means the date that is two hundred and seventy days after the
Completion Date.
7.4.1 If a Registration Failure exists on the First Put Date, then
each Vendor shall have the right and option exercisable for
thirty days after the First Put Date, to compel the Purchaser
and Weatherford to repurchase all or any portion of one-third
of the Weatherford Shares received by such Vendor (and any
stock, securities or other property received as a distribution
in respect of such Weatherford Shares), at a price equal to
the Floor Price of the shares (as defined in Clause 7.3.1)
plus a cash payment that is equal to interest, calculated at
the base rate from time to time of Bank of Scotland plus 1%,
from the Completion Date until paid, on the amount that is
equal to three times the aggregate Floor Price of the shares
as to which the option is exercised.
7.4.2 If a Registration Failure exists on the Second Put Date, then
each Vendor shall have the additional right and option
exercisable for thirty days after the Second Put Date, to
compel the Purchaser and Weatherford to repurchase all or any
portion of an additional one-third of the Weatherford Shares
(and any stock, securities or other property received as a
distribution in respect of such Weatherford Shares) received
by such Vendor, at a price equal to the Floor Price of the
Shares (as defined in Clause 7.3.1), plus a cash payment that
is equal to interest, calculated at the base rate from time to
time of Bank of Scotland plus 1% from the Completion Date
until paid, on the amount that is equal to two times the
aggregate Floor Price of the shares as to which the option is
exercised.
7.4.3 If a Registration Failure exists on the Third Put Date, then
each Vendor shall have the right and option, exercisable for
thirty days after the Third Put Date, to compel the Purchaser
and Weatherford to repurchase all or any portion of an
additional one-third of the Weatherford Shares (and any stock,
securities or other property received as a distribution in
respect of such Weatherford Shares) received by such Vendor,
at a
17
price equal to the Floor Price of the shares (as defined in
Clause 7.3.1) plus interest, calculated at the base rate from
time to time of Bank of Scotland plus 1%, from the Completion
Date until paid, on the amount that is equal to the aggregate
Floor Price of the shares as to which the option is exercised.
7.4.4 Each option created by Section 7.4 in favour of a Vendor is
exercisable by written notice from such Vendor to Purchaser
during the exercise period of such option. If an option is
exercised the completion of the purchase and sale of the
shares shall occur on the fifth Business Day thereafter. The
Vendor shall deliver certificates representing the shares,
duly endorsed for transfer to Weatherford, against which
delivery Weatherford and the Purchaser shall pay the amount
due the selling Vendor by wire transfer of same day funds (as
designated by such Vendor) in pounds sterling. Weatherford
hereby unconditionally and irrevocably agrees to cause the
Purchaser to comply with its obligations under this Agreement
and to be jointly and severally liable for the performance by
the Purchaser of its agreements and obligations hereunder as
if Weatherford were the primary party hereto. Weatherford and
the Purchaser, jointly and severally, will indemnify Vendors
(or any of them) for any loss, damage, cost or expense
(including, without limitation, reasonable attorneys' fees)
incurred by any Vendor by reason of the failure of Weatherford
or the Purchaser to comply with any of its agreements,
covenants or undertakings in this Agreement, the Tax
Undertaking and/or the Registration Rights Undertaking or the
inaccuracy, breach or incorrectness of any warranty or
representation of Weatherford or the Purchaser herein or
therein.
8. RESTRICTIVE COVENANT
8.1 For the purposes of assuring to the Purchaser the benefit of the
businesses and goodwill of the Group Companies, Xx Xxxxx and Xxx. Xxxxx
each undertakes to the Purchaser and Weatherford that they will not:-
8.1.1 for a period of three years after the Completion Date either
solely or jointly with any other person, firm or company
directly or indirectly carry on or be engaged or interested
(except as the holder for investment of securities dealt on a
stock exchange and not exceeding 5 per cent in nominal value
of the securities of any class) in any Restricted Business;
8.1.2 for a period of three years after the Completion Date, without
the prior written consent of the Purchaser, solicit or
endeavour to entice away the services of any employee of or
contractor to any Group Company engaged in skilled or
managerial work at any time in the period of one year
immediately prior to the Completion Date;
8.1.3 in competition with any Group Company for a period of three
years after the Completion Date solicit, or endeavour to
solicit, the custom of any person, firm or company who was a
customer of any Group Company in connection with the
Restricted Business at any time during the period of one year
immediately prior to the Completion Date;
8.1.4 except to the extent required by law and in such circumstances
only after prior consultation with the Purchaser not at any
time disclose or make public any secret or confidential
professional or trade information which it has acquired in
connection with the Restricted Business and will not use any
such information to the detriment of or in competition with
any Group Company.
8.2 Xx Xxxxx and Xxx. Xxxxx hereby acknowledges and agrees that the
duration, extent and application of the respective restrictions in
Clause 8.1 is reasonable in the circumstances and that such
restrictions are separate and severable restrictions and are no greater
than is reasonable and necessary for the protection of the interests of
the Purchaser and Weatherford
18
but that, if any such restriction shall be adjudged (either when taken
with others or by itself) by any court of competent jurisdiction to be
void or unenforceable but would be valid if part of the wording thereof
was deleted and/or the period was reduced and/or the area dealt with
thereby was reduced, the said restriction shall apply within the
jurisdiction of the court with such modifications as may be necessary
to make it valid and effective.
8.3 The Purchaser and Weatherford hereby agree with and acknowledges to Xx.
Xxxxx that none of the restrictions contained in Clause 8.1 shall apply
to the Permitted Activities.
9. ENTIRE AGREEMENT
This Agreement, the Registration Rights Undertaking, the Tax
Undertaking and the Disclosure Letter contain the entire agreement
between the parties with respect to the transactions contemplated
herein and shall supersede all prior proposals, representations,
agreements and negotiations relating thereto, whether written, oral or
implied, between the parties or their respective advisers or any of
them, and no modification or alteration of this Agreement shall be
effective unless in writing duly executed by the parties hereto.
10. DELAY/FAILURE TO PROCEED
No failure or delay by either party to exercise any right or power
hereunder shall operate as a waiver thereof nor shall any partial
exercise of such right or power preclude any other or further exercise
thereof or the exercise of any other right.
11. ANNOUNCEMENTS
Neither party shall prior to Completion make any announcement of or
concerning this Agreement unless the prior written consent of the other
party has been obtained to the making of such announcement and the
terms thereof have been agreed in advance by that other party provided
that nothing in this Clause shall restrict the making of any public
announcement required by law or by any regulatory body. Subsequent to
the Completion, none of the Vendors shall make any announcement of or
concerning this Agreement without the prior written consent of the
Purchaser and Weatherford.
12. ASSIGNATION
12.1 Subject to Clause 12.2, neither party may assign or transfer any of its
rights or obligations under this Agreement without the prior written
consent of the other party.
12.2 The Purchaser and Weatherford shall be entitled without the consent of
any of the other parties hereto to assign their rights under this
Agreement to any Affiliate or Associate of the Purchaser.
12.3 Subject to Clause 12.1, this Agreement shall be binding upon each
party's successors, permitted assignees, executors and legal
representatives.
13. COSTS AND EXPENSES
13.1 Save as otherwise provided herein, the Purchaser and the Vendors shall
bear their own respective costs and expenses in relation to the
preparation, execution and implementation of this Agreement and the
sale and purchase of the Sale Shares. The Purchaser shall be
responsible for payment of any stamp duty or equivalent tax or levy in
any other jurisdiction on this Agreement and on the transfers of the
Sale Shares to be effected hereunder.
14. RIGHT TO DAMAGES
19
14.1 Notwithstanding any rule of law to the contrary, the Purchaser shall be
entitled to retain the Sale Shares and to claim damages for any breach
of any provision of this Agreement (including the Warranties and the
Tax Undertaking) by the Warrantors.
15. SEVERABILITY
If any term or provision in this Agreement shall in whole or in part be
held to any extent to be illegal or unenforceable under any enactment
or rule of law, that term or provision or part shall to that extent be
deemed not to form part of this Agreement and the validity and
enforceability of the remainder of this Agreement shall not be
affected.
16. NOTICES
16.1 All notices, requests, demands or other communications to be given or
made under this Agreement shall be in writing and shall be given or
made:-
16.1.1 in the case of the Vendors or the Warrantors to the addresses
set out in Part 1A or 1B of the Schedule respectively
With a copy to: Xxxxx & Williamsons
Address: Xxxxxxxxxx Xxxxx, 0 Xxxxx Xxx, Xxxxxxxx XX00
0XX
Attention: Xxxxxx Xxxxxx/Xxxxxxxx X. Xxxxxxxx
16.1.2 in the case of the Purchaser, to Xxxxxxxxxxx Eurasia Limited
and Xxxxxxxxxxx International, Inc., c/o Weatherford
International, Inc., 000 Xxxx Xxx Xxxx., Xxxxx 000, Xxxxxxx,
Xxxxx 00000, marked "For the attention of Xxxxxx X. Xxxx,
Senior Vice President and General Counsel"
With a copy to: Xxxxxxx & Xxxxx X.X.
Address: 00 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx XX0 0XX
Attention: Xxxxx Xxxxx
Provided always that either party may, by written notice to the other,
substitute another address in the United Kingdom for the service of
notices hereunder.
16.2 Notices may be given by being delivered to the address for the service
of notices of the addressee (in which case the notice shall be deemed
to be served at the time of delivery) or by being sent by recorded
delivery mail (in which case the notice shall be deemed to be served 48
hours after the time of posting) or by being sent by fax (in which case
the notice shall be deemed to be served on receipt of the appropriate
transmission receipt).
16.3 In proving service of any notice, it shall be sufficient to prove that
delivery was made or that the envelope containing the notice was
properly addressed and posted recorded delivery or that the fax was
sent, as the case may be.
20
17. GOVERNING LAW
This Agreement shall be governed by and construed in all respects in
accordance with the laws of Scotland and the parties hereto hereby
irrevocably prorogate the non-exclusive jurisdiction of the Scottish
Courts: IN WITNESS WHEREOF this Agreement consisting of this and the
preceding pages, together with the Schedule annexed, is executed in
duplicate at Aberdeen, Scotland on the 2nd day of September, 1999 as
follows:-
Xxxxx Xxxxxxxx Xxxxx
Xxxxxx Xxxxxxx Xxxxx
Fraser Xxxxxx Xxxxx
Director for and on behalf of
P. & W. Trustees (Aberdeen)
Limited
Stuart Xxxxxx Xxxxxxxx
SUBSCRIBED for and on behalf of Xxxxxxxxxxx Eurasia Limited by one of its
directors in the presence of-
Xxxxxxxxxxx Eurasia Limited
SUBSCRIBED for and on behalf of Xxxxxxxxxxx International, Inc. by one of its
officers in the presence of-
Xxxxxxxxxxx International, Inc.
21
ANNEX A
REGISTRATION RIGHTS UNDERTAKING
This Registration Rights Undertaking ("Agreement"), dated as of 2 September
1999, is made by and among Xxxxxxxxxxx Eurasia Limited, a company incorporated
in England and Wales (Reg No. 2440463) and having its Registered Office at 00/00
Xxxxx Xxxx, Xxxxx Xxxxxxxx, Xxxxxxx XX00 0XX (the "Purchaser"); Xxxxxxxxxxx
International Inc, a Delaware corporation ("Company"), and those certain holders
listed on the signature page(s) hereto (individually a "Holder" and collectively
the "Holders"), who hereby agree as follows:-
1. INTRODUCTION
For purpose of this Agreement, the following terms shall have the
meanings ascribed to them below.
"Agreement" shall mean this Registration Rights
Undertaking, as amended,
supplemented or otherwise modified
from time to time;
"best lawful efforts" shall mean the efforts that a
prudent business person desirous of
achieving a result would use under
similar circumstances to ensure
that such result is achieved as
expeditiously as possible;
"Common Stock" means the Company's common stock,
par value $1.00 per share;
"Completion Date" means the date of the closing of
the transactions by the Purchaser,
Company and Holders, pursuant to
the Share Sale Agreement, dated of
even date herewith (the "Share Sale
Agreement");
"Exchange Act" shall mean the United States
Securities Exchange Act of 1934, as
amended, or any successor
legislation thereto (including the
rules and regulations promulgated
thereunder);
"Registrable Securities" shall mean (a) the Shares and (b)
any Common Stock or other
securities of the Company issued or
issuable with respect to any of the
Shares by way of stock dividend or
stock split, or in connection with
a combination of shares,
recapitalisation, merger,
consolidation or other
reorganisation or otherwise. As to
any particular Registrable
Securities, such securities shall
cease to be Registrable Securities
when (i) such securities may be
sold without any of the conditions
or limitations of paragraphs (c),
(e)(1), (e)(2) and (f) of Rule 144,
whether such conditions or
limitations arise from the status
of the Registrable Securities as
"restricted securities", (ii) such
securities shall have been
transferred, new certificates not
bearing a legend restricting
further transfer shall have been
delivered by the Company and
subsequent disposition of them
shall not require registration or
qualification of them under the
22
Securities Act or any state
securities or blue sky law then in
force, or (iii) such securities
shall have ceased to be
outstanding;
"Rule 144" shall mean Rule 144 promulgated by
the SEC under the Securities Act,
or any successor to such rule;
"Rule 145" shall mean Rule 145 promulgated by
the SEC under the Securities Act,
or any successor to such rule;
"Rule 158" shall mean Rule 158 promulgated by
the SEC under the Securities Act,
or any successor to such rule;
"SEC" shall mean the United States
Securities and Exchange Commission,
or any successor agency thereto;
"Securities Act" shall mean the United States
Securities Act of 1933, as amended,
and the rules and regulations
promulgated thereunder;
"Shares" means the Common Stock issued to
each Holder pursuant to the Share
Sale Agreement.
The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and
section, subsection, schedule and exhibit references are to this
Agreement. Capitalised terms used in this Agreement but not defined
herein shall have the meanings ascribed to them in the Share Sale
Agreement.
2. SHELF REGISTRATION
(a) On or prior to the date which is ten Business Days after the
Completion Date, the Company will file a "shelf" registration
statement (the "Shelf Registration") on Form S-3 (or other
appropriate form) pursuant to Rule 415 under the Securities
Act (or any similar rule that may be adopted under that Act)
with respect to dispositions of all of the Registrable
Securities for resale in a non-underwritten offering in
accordance with subsection (b) below. The Company will use its
best lawful efforts to cause the Shelf Registration to be
declared effective as promptly as it practicable after such
filing and, subject to subsections (c) and (d) below, will use
its best lawful efforts to keep the Shelf Registration
effective, supplemented and amended to the extent necessary to
assure that it is available for sale of the Registrable
Securities by the Holders thereof (and public resale of the
Registrable Securities covered by the Shelf Registration) and
that it conforms with the requirements of this Agreement, the
Act, and the policies, rules and regulations of the SEC, in
each case during the entire period (the "Shelf Effective
Period") beginning on the date such Shelf Registration shall
first be declared effective under the Securities Act (the
"Shelf Effective Date") and ending on the earliest to occur of
(i) the second anniversary of the Shelf Effective Date plus
such additional number of days during which Holders were not
entitled or legally permitted to sell the Registrable
Securities, (ii) such date by which all of the Registrable
Securities have been sold, or (iii) such date by which all of
the Registrable Securities may be sold without any of the
conditions or limitations of paragraphs (c), (e)(1), (e)(2)
and (f) of Rule 144, by virtue of status of the Registrable
Securities as "restricted securities".
(b) Each Holder will, within five Business Days after the
Completion Date, furnish the Company in writing any of the
information specified in Items 507 and 508 of
23
Regulation S-K under the Act, or any other information,
reasonably required by the Company for use in the Shelf
Registration or any new prospectus or prospectus supplement or
post-effective amendment.
(c) If during the Shelf Registration Period the Company believes
that an event or events have occurred which, in the good faith
opinion of the Company, require the filing of a new prospectus
or prospectus supplement or post-effective amendment in order
that the prospectus not contain any misstatement of a material
fact or not omit to state a material fact required to be
stated therein or necessary to make the statements therein (in
the light of the circumstances under which they were made) not
misleading (a "Corrective Filing"), then the Company shall
promptly so notify the Holders (a "Material Event Notice"),
and the Company shall prepare and file with the SEC and
deliver to such Holders such Corrective Filing, as promptly as
practicable but in any event within ten days after the date of
Material Event Notice is given, except that the Company may
delay such filing for such number of days, not to exceed 75,
if the Company determines that (i) the public disclosure of
any of the information requiring the Corrective Filing is
impractical or would have a material adverse effect on the
Company, or (ii) the filing of such Corrective Filing would
have a significant disruptive effect on any material
transaction then pending. If any new prospectus or prospectus
supplement or post-effective amendment is required in
connection with the Shelf Registration other than a Corrective
Filing (any such filing, other than a Corrective Filing, is
herein called a "Routine Filing"), the Company will so notify
the Holders in writing (a "Filing Notice") and shall prepare
and file with the SEC and deliver to the Holders such Routine
Filing as promptly as practicable but in any event within ten
days after the date the Filing Notice is given. The Holders
may make Sales of the Registrable Securities under the Shelf
Registration during the Shelf Effective Period, but if the
Holders have received a Material Event Notice or Filing
Notice, Sales may not be made from the time such notice is
received until the date on which the Corrective Filing or
Routine Filing, as the case may be, has been filed or if the
Corrective Filing or Routine Filing is a post-effective
amendment, the date the post-effective amendment has become
effective under the Securities Act, of which the date the
Company shall give prompt notice to the Holders.
(d) Notwithstanding anything to the contrary contained in this
Section 2, the Company shall be permitted, on written notice
to the Holders, to suspend the period of sale or distribution
of the Shares at any time:
(i) during the period beginning ten days prior to the
estimated date of filing, and ending on the date twenty
days following the effective date of, a registration
statement pertaining to an underwritten public offering
of securities for the account of the Company, provided
however, the Company is actively employing in good
faith its best lawful efforts to cause such
registration statement to become effective;
(ii) during a period, not to exceed sixty days, in which the
Company is in possession of material non-public
information concerning it or its business and affairs,
the public disclosure of which, in the good faith
judgement of the Company as certified in a certificate
signed by the President or Chief Executive Officer of
the Company and furnished to the Holders that would
have a material adverse effect on the Company or in
which it is engaged in any material acquisition,
transaction or disposition transaction that would, in
the good faith judgement of the Company as certified in
a certificate signed by the President or Chief
Executive Officer of the Company and furnished to the
Holders, be significantly disrupted by a sale or
distribution.
24
(e) The Company's filing of a report under the Exchange Act that
is incorporated by reference into the prospectus shall be
considered to be a Corrective Filing if such filing eliminates
the necessity of otherwise making a Corrective Filing.
(f) The Company may give such stop transfer instructions as it
shall deem reasonably necessary to prevent any Sale of
Registrable Securities under the Shelf Registration at any
time when the Holders are not permitted to make such a Sale,
but the Company will be responsible for any Losses sustained
by the Holders by reason of any failure by the Company to lift
any such instructions so as to permit the Holders to deliver
Registrable Securities on a timely basis.
3. PIGGYBACK REGISTRATION
(a) Right to Piggyback - Whenever the Company proposes to register
any of its Common Stock for its own account under the
Securities Act (other than pursuant to a registration granted,
sold or to be sold exclusively to employees or directors of
the Company or a registration statement filed pursuant to Rule
145 under the Securities Act, or a shelf registration pursuant
to Rule 415), the Company will give prompt written notice to
the Holders of its intention to effect a registration and
will, subject to Section 3(b) below, include in such
registration Holder's Shares with respect to which the Company
has received written requests for inclusion therein within ten
days after the giving of notice by the Company. All
registrations requested pursuant to this Section 3(a) are
referred to herein as "Piggyback Registrations".
(b) Priority on Piggyback Registrations - If a Piggyback
Registration involves the registration of shares of Common
Stock offered in a firm commitment underwritten offering and
the managing underwriter(s) for the offering advise the
Company that in their opinion the number of shares of Common
Stock requested to be included in such registration exceeds
the number of Common Stock which can be sold in such offering
without affecting the success of the offering of the
securities of the Company to be offered and sold by the
Company for its own account, the Company will so advise the
Holders in writing and will include in such registration that
number of shares of Common Stock which the managing
underwriter(s) have advised the Company, in their opinion,
will not affect the success of the offering of the securities
of the Company to be offered and sold by the Company for its
own account, such number of shares to be included in such
registration in accordance with the following priorities: (i)
first, the Common Stock and other securities, if any, that the
Company proposes to sell; (ii) second, the Common Stock and
securities, if any, that any person (other than the Holders)
having piggyback registration rights granted prior to the date
hereof who by their terms have priority over the rights of the
Holders on registration, proposes to sell; and (iii) third, on
a pro-rata basis, (A) the Holder's Shares requested to be
included in such registration pursuant to Section 3(a) above
and (B) any other Common Stock owned by persons other than the
Holders having rights to participate in an underwritten
registered offering of Common Stock and who have notified the
Company of their intention to participate in such
registration.
(c) The Company may, without the consent of any Holder, withdraw
any registration statement referred to in Section 3(a) prior
to the effectiveness thereof and abandon any proposed offering
initiated by the Company, notwithstanding the request of a
Holder to participate therein in accordance with this Section
3, if the Company determines that such action is in the best
interests of the Company.
(d) Selection of Underwriters - If the Piggyback Registration is
an underwritten offering, the Company will select a managing
underwriter(s) of nationally recognised standing.
25
4. REGISTRATION PROCEDURES
Whenever the Holders have requested that any Holder's Shares be
registered, or are otherwise entitled to have such shares registered,
pursuant to this Agreement, and subject to Sections 2(c), 2(d) and 3(b)
above, the Company will use its best lawful efforts to effect the
registration of such Holder's Shares and pursuant thereto the Company
will:-
(a) prepare and file with the SEC under the Securities Act a
registration statement with respect to such Holder's shares,
and use its best lawful efforts to cause such registration
statement to become effective and to remain effective as
provided herein;
(b) prepare and file with the Commission such amendments and
supplements, if any, to such registration statement and the
prospectus used in connection therewith as may be necessary to
(i) keep such registration statement effective during the
Shelf Registration Period, if such registration statement is
the Shelf Registration and otherwise for a period which is the
earlier of (A) ninety days or (B) until the completion of the
distribution under such registration statement and (ii) comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration
statement in accordance with the intended methods of
disposition by the sellers thereof set forth in such
registration statement;
(c) furnish to each seller of Holder's Shares such number of
copies of such registration statement (including exhibits),
each amendment and supplement thereto, the prospectus included
in such registration statement (including each preliminary
prospectus) as such seller may reasonably request in order to
facilitate the disposition of such shares;
(d) use its best lawful efforts to register or qualify such
Holder's Shares under such securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and
all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition
in such jurisdictions of the Holder's Shares owned by such
seller, provided that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this
subsection, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in
any such jurisdiction;
(e) notify each seller of Holder's Shares at any time when a
prospectus relating thereto is required to be delivered under
the Securities act, when it becomes aware of the happening of
any event as a result of which the prospectus included in such
registration statement (as then in effect) contains any untrue
statement of a material fact or omits any fact necessary to
make the statements therein not misleading in light of the
circumstances then existing, and, as promptly as practicable
thereafter (but subject to Sections 2(c) and 2(d) in the case
of the Shelf Registration), prepare in sufficient quantities a
supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Holder's
Shares, such prospectus will not contain any untrue statement
of a material fact or omit to state any fact necessary to make
the statements therein not misleading in light of the
circumstances then existing;
(f) subject to the execution of confidentiality agreements in a
form satisfactory to the Company, make reasonably available
for inspection by any seller of Holder's Shares, the
Representative Counsel (as hereinafter defined) and any
attorney, accountant or other agent retained by any such
Representative Counsel, all financial and other records,
pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such
seller. Representative Counsel, attorney, accountant or agent
in connection with such registration statement to the extent
such information is
26
reasonably necessary to satisfy any of its obligations under
applicable law.
(g) upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 4(e), such
Holder will forthwith discontinue such Holder's disposition of
Holder's Shares pursuant to the registration statement
covering such Holder's shares until such Holder's receipt of
the copies of the supplemented or amended prospectus
contemplated by Section 4(e) and, if the Company shall give
any such notice, the period mentioned in Section 4(b) shall be
extended by the number of days during the period from and
including the date of the giving of such notice to and
including the date when each seller of any Holder's Shares and
other shares of Common Stock covered by such registration
statement shall have received the copies of the supplemented
or amended prospects contemplated by Section 4(e);
(h) in connection with the preparation and review pursuant to this
Agreement of any registration statement or prospectus or any
amendments or supplements thereto, the Holders of a majority
of the Holder's Shares included in such registration will
choose one counsel ("Representative Counsel") who shall
participate in the registration process on their behalf;
co-ordinate requests by sellers of Holder's Shares for
information from the Company and act as liaison between such
Holders or their individual counsel, accountants and agents
and the Company; and
(i) provide the Holders and Representative Counsel a reasonable
opportunity to review and comment on any fling to be made in
connection with any such registration, other than documents
incorporated by reference in such registration statement.
In the case of each registration, qualification or compliance effected
by the Company pursuant to this Agreement, the Company will keep each
Holder advised in writing as to the initiation of each registration,
qualification and compliance and as to the completion thereof.
5. REGISTRATION EXPENSES
Whether or not any registration pursuant to this Agreement shall become
effective, all expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all
registration and filing fees, National Association of Securities
Dealers' fees, fees and expenses of compliance with state securities or
blue sky laws, printing and engraving expenses and fees and
disbursements of counsel for the company, the Representative Counsel,
the independent certified public accountants for the Company,
underwriters (excluding discounts and commission) and other persons
retained by the Company (all such expenses being herein called
"Registration Expenses"), will be borne by the Company, provided
however, that each seller of Holder's Shares shall pay (A) any
underwriting discounts and selling commissions applicable to Holder's
Shares sold by the Holders and (B) all fees and disbursements of
counsel for the Holders (other than the Representative Counsel);
provided further, that the Company's obligation to pay the fees,
expenses and disbursements of Representative Counsel shall be limited
to reasonable fees, expenses and disbursements.
6. INDEMNIFICATION
(a) Indemnification by the Company - The Company agrees to
indemnify, with respect to any registration statement filed by
it, to the full extent permitted by law, each Holder, its
officers, directors and agents and each person who controls
such Holder (within the meaning of the Securities act) against
all losses, claims, damages, liabilities and expenses
(including without limitation, reasonable fees and expenses of
legal counsel) caused by any untrue or alleged untrue
statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, except insofar as
27
the same are caused by or contained in any information with
respect to such Holder furnished in writing to the Company by
such Holder expressly for use therein.
(b) Indemnification by Holders - In connection with any
registration statement in which a Holder is participating,
each such Holder will furnish to the company in writing such
information with respect to such Holders as the Company
reasonably requests for use in connection with any such
registration statement or prospectus and agrees to indemnify,
to the fullest extent permitted by law, the Company, its
directors and officers and each person who controls the
Company (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses (including
without limitation, reasonable fees and expenses of legal
counsel) resulting from any untrue or alleged untrue statement
of a material fact or any omission or alleged omission of a
material fact required to be stated in the registration
statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or necessary to make
the statements therein not misleading, to the extent, but only
to the extent, that such untrue statement or omission is
caused by or contained in any information with respect to such
Holder so furnished in writing by such Holder expressly for
use therein and the Company does not know, at the time such
information is included in the registration statement,
prospectus, preliminary prospectus, amendment or supplement,
that such information is false or misleading. Notwithstanding
the foregoing, the liability of a Holder under this subsection
(b) shall be limited to an amount equal to the net proceeds
from the sale of the Holder's Shares.
(c) Failure to Deliver Prospectus - A person that would otherwise
be entitled to indemnification under subsection (a) or (b)
shall not be so entitled to the extent that the losses,
claims, damages, liabilities and expenses would not have
resulted but for such party's failure to deliver timely a copy
of the registration statement or prospectus or preliminary
prospectus or any amendments or supplements thereto that such
party was legally obligated to deliver and, if the indemnified
party is a Holder, that pertain to the Shelf Registration.
(d) Conduct of Indemnification Proceedings - Promptly after
receipt by an indemnified party under subsection (a) or (b)
above of notice or the commencement of any action, suit,
proceeding, investigation or threat thereof made in writing
for which such person will claim indemnification pursuant to
this Agreement, such indemnified party shall notify the
indemnifying party in writing of the commencement thereof or
of such involvement, as the case may be, but the omission to
so notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise
than under such subsection. In any case any such action
referred to under subsection (a) or (b) shall be brought
against any indemnified party and it shall notify the
indemnifying party of the commencement thereof the
indemnifying party shall be entitled to participate therein
and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defence
thereof, with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume
the defence thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any
legal expenses of counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection
with the defence thereof other than reasonable costs of
investigation. The indemnifying party shall promptly pay, upon
submission of invoices by the indemnified party, all expenses
incurred by the indemnified party for which indemnification is
provided, which payment shall be made to the person who
submitted the invoice or, if the indemnified party submits
evidence (reasonably satisfactory to the indemnifying party)
that the indemnified party has paid such invoice, then to the
indemnified party. The indemnifying party shall not be
required to indemnify the indemnified party with respect to
any amounts paid in settlement of any action, proceeding or
investigation
28
entered into without the written consent of the indemnifying
party.
(e) Contribution - If the indemnification provided for in this
Section 6 is unavailable for reasons other than the express
provisions of this Agreement, then each indemnifying party
shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages
or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or
omissions which resulted in such loss, liability, claim,
damage or expense and any other relevant equitable
considerations. The relative fault of the indemnifying party
and of the indemnified party shall be determined by reference
to, among other things whether the untrue or alleged untrue
statement of a material fact or the omission to the state a
material fact relates to information supplied by the
indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (e)
shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata
allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
If indemnification is available under this Section 6, the indemnifying
parties shall indemnify each indemnified party to the full extent
provided in Sections 6(a) and (b) without regard to the relative fault
of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 6(e).
(f) Indemnification and Contribution of Underwriters - In
connection with any underwritten offering contemplated by this
Agreement, the Company will agree to customary provisions for
indemnification and contribution in respect of losses, claims,
damages, liabilities and expenses of the underwriters by the
Company.
Notwithstanding any other provision of this Section 6, no Holder shall
be required to contribute any amount or make any payments under this
Agreement which in the aggregate exceed the net proceeds from the sale
of the Holder's Shares.
7. PARTICIPATION IN UNDERWRITTEN REGISTERED OFFERINGS
No person may participate in any offering that is underwritten on a
firm underwriting basis hereunder unless such person (a) agrees to sell
such securities on the basis reasonably provided in any underwriting
arrangements and (b) complete and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements, custody agreements
and other documents reasonably required under the terms of such
underwriting arrangements. For purposes of this Section 7, an
arrangement, agreement or other document will be deemed to be
reasonable if it is customarily required by the underwriter.
8. PUBLIC SALE OR DISTRIBUTION OF SECURITY
To the extent not inconsistent with applicable law, each Holder whose
Registrable Securities are included (or in the case of Section 3(b),
permitted to be included but not included) in a registration statement
pursuant to Section 2 or 3 agrees not to effect any public sale or
29
distribution of the security being registered or a similar security of
the Company, or any securities convertible into or exchangeable or
exercisable for such securities, including a sale pursuant to Rule 144
under the Act, during the period beginning ten days prior to the date
on which the offering is expected to be made and the ninety day period
(or such shorter period as may be required by the Company or the
managing underwriter or underwriters with respect to any officer or
director or shareholder of the Company) beginning on the effective date
of a registration statement (except, in each case, as part of such
registration), if and to the extent reasonably requested by the
managing underwriter or underwriters in the case of an underwritten
public offering.
9. MISCELLANEOUS
(a) Termination - This Agreement and all rights and obligations
hereunder with respect to any Holder's Shares (except for the
indemnification rights provided in Section 6 hereof which
shall survive forever) will terminate on the first day on
which there are no remaining Registrable Securities, but such
termination shall not operate to release any party from any
liability or obligation that was owed at the time of such
termination.
(b) Waivers - Except as otherwise provided herein, the Company may
take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has
obtained the prior written consent of Holders of all of the
Holder's Shares.
(c) Amendments - Except as otherwise provided herein, this
Agreement may be amended only with the written consent of the
Company and the Holders of all of the Holder's Shares.
(d) Subsequent Holders of Holder's Shares - This Agreement shall
not be assignable by the Holders.
(e) Severability - Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating
the remainder of this Agreement.
(f) Counterparts - This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all counterparts
taken together will constitute one and the same Agreement.
(g) Descriptive Headings - The descriptive headings of this
Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
(h) Governing Law - All questions concerning the construction,
validity and interpretation of this Agreement and the exhibits
and schedules hereto will be governed by the internal law, and
not the law of conflicts, of State of Texas.
(i) Notices - All notices, demands or other communications to be
given or delivered under or by reason of the provisions of
this Agreement will be in writing and will be deemed to have
been given when delivered personally or mailed by certified or
registered mail, return receipt requested and postage prepaid,
to the recipient. Such notices, demands and other
communications will be sent to each of the Holders or
subsequent holders of the Holder's Shares as the case may be,
at their respective addresses on the books of the Company, and
to the Company at the address indicated below:
30
If to the Company or Purchaser:-
c/o Weatherford International, Inc.
000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000 0000
Attention: Xxxxxx X. Xxxx, Senior Vice-President and
General Counsel
with a copy to:
Xxxxxxx & Xxxxx, L.L.P
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000 0000
Attention: Xxxxxx X. Xxxxxx
or to such other address or to the attention of such other
person as the recipient party has specified by prior written
notice to the sending party.
(j) Benefit of Agreement - No person not a party to this Agreement
shall have rights under this Agreement as third party
beneficiary or otherwise.
(k) Entire Agreement - This Agreement is the entire agreement
between the Company, on the one hand, and the Holders, on the
other hand, with respect to registration by the Company of
securities issued by the Company.
(l) Aircraft Carrier Release - The parties recognise that
fundamental changes in the SEC's registration procedures may
be made by adopted of the SEC's Aircraft Carrier Release in
its current or any revised form. Should that occur, or should
such changes otherwise occur, the parties will amend this
Agreement in a reasonable manner so as to approximate as
closely as possible the same access of the Holders to the
public markets for their Registrable Securities without
materially increasing any burden to the company of providing
that access.
(m) Guarantee - All obligations of the company under this
Agreement are guaranteed by the Purchaser as a debtor bound
jointly and severally with the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first above written.
XXXXXXXXXXX EURASIA LIMITED
XXXXXXXXXXX INTERNATIONAL, INC.
HOLDERS:
Xxxxx Xxxxxxxx Xxxxx
Xxxxxx Xxxxxxx Xxxxx
Fraser Xxxxxx Xxxxx
P. & W. Trustees (Aberdeen) Limited
Stuart Xxxxxx Xxxxxxxx
31
ANNEX B
HYPOTHETICAL EXAMPLE OF ADJUSTMENTS FOR A SPIN-OFF
Assume the initial Floor Price is $40.00
Prior to the Protection Termination Date, Weatherford completes a spin-off of
its drilling products division ("DP"). On the date the shares of DP are
distributed to Weatherford stockholders (the "DP Distribution Date"), the market
value of the DP shares (calculated in accordance with Clause 7.3.4) is $7.50 per
share.
Beginning on the day after the DP Distribution Date, for purposes of Clause 7.3
the Floor Price applicable to Resales of Weatherford common stock shall be
$32.50 ($40.00 minus $7.50) and the Floor Price for the DP shares shall be
$7.50.
Resales of either or both securities would be entitled to the same price
protection with the newly-established Floor Prices.
32
THE SCHEDULE
PART 4
WARRANTIES
References in this Part 4 of the Schedule and in Parts 5 and 6 of the Schedule
to "the Company" shall unless the context otherwise requires be deemed where
applicable to include a reference to the Group Companies.
1 ACCOUNTS
1.1 THE ACCOUNTS
1.1.1 The Accounts were prepared in accordance with the historical cost
convention and the bases and policies of accounting adopted in
preparing the Accounts are the same as those adopted in preparing the
audited accounts of the Company in respect of the three last preceding
accounting periods.
1.1.2 The Accounts:-
1.1.2.1 give a true and fair view of the assets and liabilities of the Company
at the Accounts Date and its profits for the financial period ended on
that date;
1.1.2.2 comply with the requirements of the Companies Acts and other relevant
statutes;
1.1.2.3 comply with all FRSs applicable to a United Kingdom company;
1.1.2.4 are not affected by any extraordinary, exceptional or non-recurring
item;
1.1.2.5 properly reflect the financial and trading position of the Company as
at their date;
1.1.2.6 make full provision or reserve for all liabilities and full disclosure
of capital commitments of the Company outstanding at the Accounts Date;
1.1.2.7 make provision or reserve, in accordance with the principles set out in
the notes included in the Accounts, for all Tax liable to be assessed
on the Company or for which it may be accountable in respect of the
period ended on the Accounts Date.
1.1.3 No amount included in the Accounts in respect of any asset, whether
fixed or current, exceeds its purchase price or production cost (within
the meaning of CA Schedule 4) or (in the case of current assets) its
net realisable value on the Accounts Date.
1.2 THE MANAGEMENT ACCOUNTS
1.2.1 The Management Accounts disclose with reasonable accuracy the financial
position of the Company as at their date.
1.3 VALUATION OF STOCK-IN-TRADE AND WORK IN PROGRESS
1.3.1 In the Accounts and in the accounts of the Company for the three
preceding financial years the stock-in-trade and work in progress of
the Company have been treated in accordance with SSAP 9.
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1.4 DEPRECIATION OF FIXED ASSETS
1.4.1 In the Accounts and in the accounts of the Company for the three
preceding financial years, the fixed assets of the Company have been
depreciated in accordance with SSAP 12.
1.5 BOOK DEBTS
1.5.1 No part of the amounts included in the Management Accounts, or
subsequently recorded in the books of the Company, as owing by any
debtor is overdue by more than twelve weeks, or has been released on
terms that any debtor pays less than the full book value of his debt or
has been written off or has proved to any extent to be irrecoverable or
is now regarded by the Company as irrecoverable in whole or in part.
1.6 BOOKS AND RECORDS
1.6.1 All the accounts, books, ledgers, financial and other records, of
whatsoever kind, of the Company:
1.6.1.1 are in its possession;
1.6.1.2 have been properly kept and completed; and
1.6.1.3 do not contain any material inaccuracies or discrepancies.
2 CORPORATE MATTERS
2.1 DIRECTORS
2.1.1 The only directors of the Company are the persons whose names are
listed in relation to the Company in Part 2 of the Schedule.
2.2 SUBSIDIARIES, ASSOCIATIONS AND BRANCHES
2.2.1 The Company:
2.2.1.1 is not, and has never been, the holder or beneficial owner of nor has
it agreed to acquire any share or loan capital of any company other
than the Subsidiaries and the Dormant Subsidiaries (whether
incorporated in the United Kingdom or elsewhere);
2.2.1.2 has not outside the United Kingdom any branch, agency or place of
business, or any permanent establishment (as that expression is defined
in the relevant double taxation relief order current at the date of
this Agreement).
2.2.2 The Dormant Subsidiaries have no obligations, commitments or
liabilities (contingent or otherwise).
2.3 OPTIONS OVER THE COMPANY'S CAPITAL
2.3.1 Except as required by this Agreement, there are no agreements or
arrangements in force which provide for the present or future issue,
allotment or transfer of, or grant to any person the right (whether
conditional or otherwise) to call for the issue, allotment or transfer
of, any share or loan capital of the Company (including any option or
right of pre-emption or conversion).
34
2.4 NEW ISSUES OF CAPITAL
2.4.1 Other than pursuant to the exercise of options under the Share Option
Scheme as disclosed in the Disclosure Letter, no share or loan capital
has been issued or allotted, or agreed to be issued or allotted, by the
Company since the Accounts Date.
2.5 COMMISSIONS
2.5.1 No one is entitled to receive from the Company any finder's fee,
brokerage or other commission in connection with the sale and purchase
of the Sale Shares under this Agreement.
2.6 MEMORANDUM AND ARTICLES OF ASSOCIATION, STATUTORY BOOKS AND RESOLUTIONS
2.6.1 The copy of the memorandum and articles of association of the Company
delivered to the Purchaser's Solicitors is accurate and complete in all
respects.
2.6.2 The register of members and other statutory books of the Company have
been properly kept and contain an up to date record of the matters with
which they should deal.
2.6.3 No notice or allegation that any of the foregoing is incorrect or
should be rectified has been received.
2.7 DOCUMENTS FILED
2.7.1 All returns, particulars, resolutions and documents required by the
Companies Acts or any other legislation to be filed with the Registrar
of Companies, or any other authority, in respect of the Company have
been duly filed.
2.8 POSSESSION OF DOCUMENTS
2.8.1 All title deeds relating to the assets of the Company, and an executed
copy of all agreements to which the Company is a party, and the
original copies of all other documents which are owned by or which
ought to be in the possession of the Company are in its possession.
2.9 INVESTIGATIONS
2.9.1 As far as the Warrantors are aware, no investigations or enquiries by,
or on behalf of, any governmental or other body in respect of the
affairs of the Company are pending or taking place or have occurred.
3 FINANCE
3.1 DIVIDENDS AND DISTRIBUTIONS
3.1.1 Since the Accounts Date the Company has not, nor is it treated as
having, declared or paid any dividend or other distribution (as defined
in ICTA Part VI Chapter II as extended by ICTA Section 418).
3.1.2 All dividends or distributions declared, made or paid by the Company
have been declared, made or paid in accordance with its articles of
association and the applicable provisions of the Companies Acts.
35
3.2 BANK AND OTHER BORROWINGS
3.2.1 Details of all limits on the Company's bank overdraft facilities have
been supplied to the Purchaser in the Disclosure Letter.
3.2.2 The total amount borrowed by the Company from each of its bankers does
not exceed its agreed facilities.
3.2.3 The Company has not outstanding, nor has it agreed to create or issue,
any loan capital; nor has it factored any of its debts, or engaged in
financing of a type which would not require to be shown or reflected in
the Accounts, or borrowed any money which it has not repaid, save for
borrowings not exceeding the amounts shown in the Accounts.
3.2.4 The Company has not received notice from any lenders of money,
requiring repayment or intimating the enforcement of any security; and
there are no circumstances known to the Warrantors which, so far as
they are aware, are likely to give rise to any such notice.
3.3 LOANS BY AND DEBTS DUE TO THE COMPANY
3.3.1 The Company has not lent any money which has not been repaid to it, or
owns the benefit of any debt (whether or not due for payment), other
than trade debts which have arisen in the ordinary course of its
business.
3.4 LIABILITIES
3.4.1 There are no material liabilities of the Company known to the
Warrantors which are outstanding other than those liabilities disclosed
in the Management Accounts or incurred in the ordinary and proper
course of trading since the Management Accounts Date.
3.4.2 There has been no exercise or purported exercise of, or claim for, any
charge, lien, encumbrance or equity over any of the fixed assets of the
Company; and there is no dispute directly or indirectly relating to any
of its fixed assets.
3.5 BANK ACCOUNTS
3.5.1 A complete and accurate statement of the bank accounts of the Company
as at 1 September 1999 has been supplied to the Purchaser and is
attached to the Disclosure Letter.
3.6 GOVERNMENT GRANTS
3.6.1 Full details of all grants, subsidies or financial assistance applied
for or received by the Company within the five years preceding the
Completion Date from any governmental department or agency or any local
or other authority have been supplied to the Purchaser in the
Disclosure Letter.
4 TRADING
4.1 CHANGES SINCE ACCOUNTS DATE
4.1.1 Since the Accounts Date the business of the Company has been continued
in the ordinary and normal course.
4.2 EFFECT OF SALE OF SALE SHARES
36
4.2.1 Compliance with the terms of this Agreement does not and will not:
4.2.1.1 result in the breach of, or constitute a default under any agreement or
document to which the Company is a party, or any provision of the
memorandum or articles of association of the Company or any
encumbrance, lease, contract, order, judgement, award, injunction,
interdict, regulation or other restriction or obligation of any kind by
which or to which any asset of the Company is bound or subject;
4.2.1.2 relieve any person from any contractual obligation to the Company or
enable any person to determine any such obligation or any right or
benefit enjoyed by the Company, or to exercise any right under an
agreement with or otherwise in respect of the Company;
4.2.1.3 result in the creation, imposition, crystallisation or enforcement of
any encumbrance on any of the assets of the Company;
4.2.1.4 result in any present or future indebtedness of the Company becoming
due and payable or capable of being declared due and payable prior to
its stated maturity.
4.2.1.7 so far as the Warrantors are aware, (but without any enquiry) cause any
director or senior employee of the Company to leave employment.
4.2.1.8 by reason only of Completion entitle any third party to terminate any
contract, licence or other agreement to which any of the Group
Companies is a party.
4.3 JOINT VENTURES AND PARTNERSHIP
4.3.1 The Company is not, nor has it agreed to become, a member of any joint
venture, consortium, partnership or other unincorporated association;
and the Company is not, nor has it agreed to become, a party to any
agreement or arrangement for sharing commissions or other income.
4.4 AGREEMENTS RELATING TO THE MANAGEMENT AND BUSINESS
4.4.1 There are no agreements, arrangements or understandings between the
Company and any person who is a shareholder or the beneficial owner of
any interest in it, or in any company in which the Company is
interested, or any Associate of any such person, relating to the
management of the Company's business, the appointment or removal of
directors of the Company, the ownership or transfer of ownership or the
letting of any of the assets of the Company, the provision, supply or
purchase of finance goods, services or other facilities to, by or from
the Company, or in any other respect relating to the Company's affairs.
4.5 AGENCY AGREEMENTS AND AGREEMENTS RESTRICTING BUSINESS
4.5.1 The Company is not a party to any agency, distributorship, marketing,
purchasing, manufacturing or licensing agreement or arrangement, or any
restrictive trading or other agreement or arrangement pursuant to which
any part of its business is carried on, or which in any way restricts
its freedom to carry on the whole or any part of its business in the
United Kingdom or elsewhere in such manner as it thinks fit.
4.5.2 The Company is not bound by any undertaking or assurances given to any
court or governmental agency.
4.6 LITIGATION, DISPUTES AND WINDING UP
37
4.6.1 The Company is not engaged in any litigation or arbitration proceedings
as pursuer or defender, plaintiff or defendant; there are no
proceedings pending or threatened either by or against the Company and
there are no circumstances known to the Warrantors which are likely to
give rise to any litigation or arbitration.
4.6.2 There is no dispute with any revenue or other official, department in
the United Kingdom or elsewhere, in relation to the affairs of the
Company and there are no facts known to the Warrantors which may give
rise to any dispute.
4.6.3 There are no claims pending or threatened against the Company by an
employee or xxxxxxx or third party, in respect of any accident or
injury, which are not fully covered by insurance and there are no
circumstances known to the Warrantors likely to give rise to any such
claims.
4.6.4 No order has been made or resolution passed for the winding up of the
Company nor has any petition been presented for that purpose; no
diligence, arrestment, distress, execution or other process has been
levied in respect of the Company which remains undischarged and as far
as the Warrantors are aware there is no unfulfilled or unsatisfied
judgement or court order outstanding against the Company.
4.6.5 As far as the Warrantors are aware (but without any enquiry) no steps
have been taken by any third party to appoint a receiver, administrator
or judicial factor to the Company or in respect of any of its assets.
4.7 COMPLIANCE WITH STATUTES
4.7.1 The Company has conducted and is conducting its business in all
material respects in accordance with all applicable laws and
regulations whether of the United Kingdom or elsewhere.
4.7.2 The Company does not carry on (nor has it, at any time when not an
authorised person under Chapter III, Financial Services Xxx 0000,
carried on) investment business in the United Kingdom within the
meaning of the Financial Services Xxx 0000, Section 1.
4.8 DOCUMENTS STAMPED
4.8.1 All documents which affect the right, title or interest of the Company
in or to any of its property, undertaking or assets, or to which the
Company is a party and which attract stamp duty have been duly stamped.
4.9 BUSINESS NAMES
4.9.1 The Company does not use, and has never used, a name for any purpose
other than its full corporate name.
4.10 POWERS OF ATTORNEY
4.10.1 No power of attorney given by the Company is in force.
4.11 LICENCES AND CONSENTS
4.11.1 The Company has obtained all necessary material licences and consents
for the proper carrying on of its business and all such licences and
consents are valid and subsisting; the Company has at all material
times complied with all terms and conditions imposed by or otherwise
applicable to such licences and consents.
38
4.12 SUBSISTING CONTRACTS
4.12.1 Particulars of all subsisting agreements or arrangements which are or
may be material in relation to the business or affairs of the Company
have been disclosed to the Purchaser.
4.12.2 Particulars of all tenders, offers, bids, work specifications,
pre-qualifications and the like issued by or on behalf of the Company
and which are currently outstanding (and whether or not accepted) have
been disclosed to the Purchaser.
4.12.3 The Company is not in breach of any material agreements or arrangements
to which it is a party.
4.13 PURCHASES AND SALES FROM OR TO ONE PARTY
4.13.1 Neither more than 10% of the aggregate amount of all the purchases, nor
more than 10% of the aggregate amount of all the sales, of the Company
are obtained or made from or to the same supplier or customer
(including any person in any way connected with such supplier or
customer).
4.14 GUARANTEES AND INDEMNITIES
4.14.1 No guarantee, or agreement for indemnity or for suretyship given by or
for the accommodation of the Company is outstanding.
5 EMPLOYMENT
5.1 EMPLOYEES AND TERMS OF EMPLOYMENT
5.1.1 Full particulars of the identities, dates of commencement of
employment, or appointment to office, and terms and conditions of
employment of all the employees and officers of the Company, including
without limitation profit sharing, commission, bonus and discretionary
bonus arrangements, motor car entitlement, share option entitlement,
entitlements to life, disability and/or accident insurance cover,
private medical cover, staff discounts, housing allowance and any and
all other perquisites of office or employment have been delivered to
the Purchaser together with details of all bonus payments, profit
sharing or commission payments, pension payments and any other
discretionary payments made or committed to be made by the Company
since the Accounts Date.
5.1.2 There are no agreements or arrangements (whether or not legally
binding) between the Company and any trade union or other body
representing employees.
5.1.3 No contract of service exists between the Company and a director or
employee in relation to which any relevant requirements of CA Section
319 have not been fulfilled.
5.2 TERMINATION OF CONTRACTS OF EMPLOYMENT
5.2.1 All subsisting contracts of service to which the Company is a party are
determinable at any time on 3 months' notice or less without
compensation (other than compensation in accordance with the Employment
Rights Act 1996).
5.2.2 No executive of the Company, who is in receipt of remuneration in
excess of (pound)40,000 per annum, and no officer of the Company has
given or received notice terminating his employment and except as
expressly contemplated in this Agreement, no such executive or
39
officer will be entitled to give such notice as a result of this
Agreement or has left the employment of the Company within the 6 months
preceding Completion.
5.3 INDUSTRIAL DISPUTES AND NEGOTIATIONS
5.3.1 The Company is not involved in any industrial dispute with any of its
employees and there are no facts known to the Warrantors which might
reasonably be expected to result in such an industrial dispute.
5.4 INDUSTRIAL AGREEMENTS
5.4.1 The Company has not entered into any recognition agreement with a trade
union.
5.5 REDUNDANCIES
5.5.1 No employee will become redundant and be entitled to a redundancy
payment as a result of this Agreement.
5.6 PENSIONS
5.6.1 Apart from the pension scheme referred to in Part 7 of the Schedule
("the Scheme") the Company is not under any liability or obligation or
a party to any ex-gratia arrangement or promise to pay pensions,
gratuities, superannuation allowances or the like, or otherwise to
provide 'relevant benefits' within the meaning of ICTA Section 612 to
or for any of its past or present officers or employees or their
dependants; and there are no retirement benefit, pension or death
benefit or similar schemes or arrangements in relation to or binding on
the Company or to which the Company contributes.
5.6.2 All payments required to be made by the Company in respect of the
Scheme have been made.
5.6.3 Details of the Scheme have been provided to the Purchaser in the
Disclosure Letter.
6 ASSETS
6.1 OWNERSHIP OF ASSETS
6.1.1 At the Accounts Date the Company owned and had good title to all the
assets included in the Accounts and (except for current assets
subsequently sold or realised in the ordinary course of business) still
owns and has good title to all assets included in the Accounts and to
all assets acquired since the Accounts Date.
6.1.2 Other than the Bank's Security the Company has not created, granted or
agreed to create or grant any security interest or other encumbrance in
respect of any of the fixed assets included in the Accounts or acquired
or agreed to be acquired since the Accounts Date.
6.1.3 Except as disclosed in the Accounts, none of the property, assets,
undertaking, goodwill or uncalled capital of the Company is subject to,
and the Company has not agreed to grant, any option, charge, lien or
encumbrance, or right of pre-emption.
6.2 INSURANCE
6.2.1 All the stock-in-trade and the assets and undertakings of the Company
of an insurable nature are, and have at all material times been,
insured in amounts representing their full
40
replacement or reinstatement value against fire and other risks
normally insured against by persons carrying on the same business as
that carried on by it.
6.2.2 No claim is outstanding or may be made under any of the policies of
insurance of the Company and as far as the Warrantors are aware no
circumstances exist which are likely to give rise to such a claim.
6.2.3 All liabilities of the Company (including without limitation employers
liability, public liability and product liability) normally insured
against by persons carrying on the same business as the Company are
adequately insured.
6.2.4 The Company has not failed to disclose any material fact to any of its
insurers or so far as the Warrantors are aware done or omitted to do
any act or thing which may entitle the Company's insurers to avoid
liability under any of the Company's policies of insurance.
6.3 INTELLECTUAL PROPERTY RIGHTS AND TRADE SECRETS
6.3.1 All Intellectual Property Rights used or required by the Company in
connection with its business are in full force and effect and are
vested in and beneficially owned by it.
6.3.2 The Company is the sole beneficial owner of the Intellectual Property
Rights listed in Part 8 of the Schedule and (where registration is
possible) the Company has been and is registered as proprietor.
6.3.3 No right or licence has been granted to any person by the Company to
use in any manner or to do anything which would or might otherwise
infringe any of the Intellectual Property Rights referred to in Clauses
6.3.1 and 6.3.2 above; no act has been done or omission knowingly
permitted by the Company whereby they or any of them have ceased or
might cease to be valid and enforceable.
6.3.4 The business of the Company (and of any licensee under a licence
granted by the Company) as now carried on and the use by the Company of
the Intellectual Property Rights referred to in Clauses 6.3.1 and 6.3.2
above does not, infringe any Intellectual Property Right of any other
person or give rise to a liability to pay compensation pursuant to the
Patents Xxx 0000 Sections 40 and 41 and no such infringement has
occurred in the past.
6.3.5 Nothing has been done by the Company which would enable any licensee
under a licence of Intellectual Property Rights granted by or to the
Company to be terminated or which in any way constitutes a breach of
the terms of any licence.
6.3.6 The Company has received no notification by or on behalf of any third
party challenging the use or registration by the Company of any of the
Intellectual Property rights used or required by the Company in
connection with its business.
6.3.7 The Company has duly paid all registration and/or renewal fees in
respect of all Intellectual Property Rights owned by it for which fees
are payable.
6.3.8 None of the Vendors nor any of the past or present employees of the
Company has any rights or interests in any of the Intellectual Property
Rights referred to in Clause 6.3.1 or 6.3.2 above.
6.3.9 The Shell Licence is in full force and effect and by reason only of
Completion it cannot be terminated or changed without the consent of
the Company.
41
6.3.10 The Company does not require any additional licences or rights from
Shell or its Affiliates to conduct its business or to manufacture, sell
or rent the expandable slotted tubular products currently manufactured
and sold by the Company.
6.3.11 No third parties have any rights in and to the Intellectual Property
listed in Part 8 of the Schedule.
7 SCOTTISH PROPERTIES
7.1 TITLE
7.1.1 The Scottish Properties comprise all the properties currently owned,
occupied or otherwise used by the Company in Scotland in connection
with its business.
7.1.2 The Company is in occupation of and has received no challenge to its
occupancy of the Scottish Properties and the Company has not disponed
its heritable interest in or assigned or sub-leased its leasehold
interest in the Scottish Properties nor has it entered into any other
agreement whereby a third party has been given or is entitled to
occupation of the Scottish Properties.
7.1.3 There are no options or rights of pre-emption or similar rights in
favour of third parties affecting the Scottish Properties which may be
binding on the Company. The Company has not agreed to dispose of the
Scottish Properties or any part thereof or interest in and has not
agreed to acquire the whole or any part of any other land or buildings
or any interest (including as tenant or licensee), option, right or
right of pre-emption in any other land.
7.1.4 No Group Company has any outstanding or contingent liability in respect
of any lease or licence other than in respect of the Leasehold
Properties and the Non-Scottish Properties.
7.1.5 As far as the Warrantors are aware all title conditions and burdens
affecting the Heritable Properties have been implemented or if of a
continuing nature have been complied with to date.
7.1.6 No deeds which are capable of being recorded in the Register of Sasines
or given effect to in the Land Register and no floating charge,
debenture or other security document (other than the Bank's Security)
in respect of or affecting the Scottish Properties have been granted by
the Company.
7.1.7 The Scottish Properties are not held in trust for any other party.
7.2 ENCUMBRANCES
7.2.1 The Scottish Properties are not subject to any outgoings other than
business rates, water rates and insurance premiums and other normal
outgoings incurred in relation to commercial property in Scotland and
in the case of the Leasehold Properties rent and service charges all of
which have been paid to date.
7.3 DISPUTES ETC
7.3.1 There are no current disputes between the landlords and the tenants in
respect of the Leasehold Properties nor between the Company and any
neighbouring owner or occupier with respect to any matter including
without limitation any dispute in relation to boundary walls and fences
or with respect to any servitudes, easements, rights over or means of
access to, any of the Scottish Properties nor in so far as the
Warrantors are aware are there any impending
42
actions, claim or demands between the Company and any third party
affecting the Scottish Properties.
7.4 INSURANCE, RATES ETC.
7.4.1 The information provided to the Purchaser with respect to the insurance
policies is complete and accurate in all material respects.
7.4.2 The rates applicable to the Scottish Properties are those shown on the
Valuation Roll and there are no appeals or reassessments pending in
that respect.
7.5 LEASEHOLD PROPERTIES
7.5.1 The Company has not received any notice that it is in breach of any of
the leases under which the Leasehold Properties are held.
7.5.2 There are no rent reviews in progress under the leases of the Leasehold
Properties and no rent reviews have been agreed or determined otherwise
than on the basis of open market value.
7.5.3 As far as the Warrantors are aware the Company has not received any
notice requiring it to remedy any disrepair, wants of repair or
dilapidations in respect of, or maintenance or renewals to the
buildings and other structures comprising the Leasehold Properties.
7.5.4 No application for landlords' consent or approval has been refused or
is outstanding and landlords' consent has been granted in respect of
each alteration, improvement or extension of the Leasehold Properties,
all of which are to be disregarded at rent review.
7.5.5 As far as the Warrantors are aware the Company has and is complying
with all of the obligations of the tenants in respect of the Leasehold
Properties and the Warrantors are not aware of any breach of any
obligations of the landlords in respect of the Leasehold Properties.
7.5.6 The leasehold documents exhibited to the Purchaser include all leases,
licences, minutes of variation, back letters and other documentation
relative to the Company's occupation of the Leasehold Properties.
7.6 ENVIRONMENTAL MATTERS
7.6.1 References in this Clause to:
7.6.1.1 "the environment" includes references to land, air and water;
7.6.1.2 "Environmental Laws" means any law relating to or pertaining to the
environment and/or the health and safety of the public and/or workers
and/or the workplace and/or the generation, transportation, storage,
treatment or disposal of materials of environmental concern which are
in force as at the date of Completion and includes but is not limited
to references to common law, nuisance, the Public Health Acts, the
Control of Pollution Xxx 0000, the Rivers (Prevention of Pollution)
(Scotland) Xxx 0000 and 1965, the Water (Scotland) Xxx 0000, the Health
and Safety at Work, Etc. Xxx 0000, the Food & Environment Xxx 0000, the
Water Xxx 0000, the Environmental Protection Xxx 0000, the Environment
Xxx 0000 and the Planning (Hazardous Substances) (Scotland) Xxx 0000
and all amendments thereto and re-enactments thereof and all
regulations made thereunder and any subsidiary legislation relating
thereto and all codes of practice issued thereunder or in connection
therewith and all EC Directives;
43
7.6.1.3 "consent" and "licence" mean any consent, approval, authorisation,
exemption, licence, order, permission, recording or registration under
Environmental Health Laws (and references to obtaining consents and/or
licences shall be construed accordingly);
7.6.2 The existing uses of the Scottish Properties have been and are being
carried out in compliance in all material respects with all
Environmental Laws and all demands from any body or authority charged
with overseeing the same have been complied with in full.
7.6.3 All consents and licences with regard to the Scottish Properties or the
use of the Scottish Properties required under the Environmental Laws
are subsisting at the date hereof.
7.6.4 There is no outstanding notification, official or otherwise, nor has
any such notification been received under Environmental Laws requiring
the Group Companies to take or omit to take any action nor have any
notices been served on any of the Scottish Properties pursuant to
Environmental Laws and relating to any breach of such Environmental
Laws or any conditions contained in any licences held and as far as the
Warrantors are aware, there are no proposals pending to serve such a
notice.
7.6.5 The Group Companies have not received nor are the Warrantors aware of
any proposals to serve on it notice from the Secretary of State or any
local or central governmental body or any authority in respect of any
matter or substance stored at any of the Scottish Properties in
connection with the location, construction or maintenance of storage
facilities or any works precautions or other steps required to be
carried out thereto.
7.6.6 No prosecutions have been brought against the Group Companies in
connection with any breach of Environmental Laws relating to the use of
any of the Scottish Properties both past and present.
7.6.7 The Group Companies have not received from any of their employees or
any persons in surrounding or neighbouring properties any notice of
complaint in respect of any of the businesses carried out at any of the
Scottish Properties in connection with any substance emitted from or
allowed to accumulate thereon.
7.6.8 As far as the Warrantors are aware, no works have been carried out on
the Scottish Properties under any Environmental Laws by any statutory
authority in respect of which such authority is entitled to recover
costs and the Group Companies are not under any investigation or
enquiry in relation to environmental matters and the conduct of its
business at any of the Scottish Properties by any competent authority.
7.7 PLANNING LEGISLATION AND BUILDING CONTROL
7.7.1 No planning permission in respect of the Scottish Properties has been
revoked and there is no application for planning permission awaiting
determination or at appeal.
7.7.2 As far as the Warrantors are aware none of the following has in the
past affected the Scottish Properties: structural defects, flooding,
mining activities, subsidence, rising damp, wet or dry rot or any
infestation.
8. NON-SCOTTISH PROPERTIES
8.1 In this paragraph 8 of Part 4 of the Schedule, a reference to "the
Company" shall, unless the context otherwise requires, be deemed to
include a reference to the UK Subsidiaries and Petroline L.L.C.
44
GENERAL
8.2 The Non-Scottish Properties comprise all the properties owned, occupied
or otherwise used by the Company outwith Scotland in connection with
its business.
8.3 The Group Companies are in occupation of and have received no challenge
to their occupancy of the Non-Scottish Properties and the Company has
not disposed of or assigned or sub-leased its interest in the
Non-Scottish Properties nor has it entered into any agreement to do so.
9. YEAR 2000
All computer hardware, software, embedded chips and related systems of
the Company are Year 2000 Compliant (as such term is defined in the
British Standards Institute document PD 2000 part 1).
45
THE SCHEDULE
PART 5
LIMITATIONS
(1) The liability of the Warrantors in respect of the Warranties and the
Tax Undertaking shall be limited as provided in this Part of the
Schedule.
(2) The liability of the Warrantors under, arising out of, or in connection
with the Warranties and the Tax Undertaking shall be restricted in each
of the following respects:-
(a) the liability of the Warrantors (i) in respect of the
Warranties shall cease on the date which is twelve months
after the Completion Date except in respect of the Title
Warranties, which shall cease on the date which is five years
after the Completion Date, and (ii) in the case of any claim
under the Tax Undertaking shall cease, on the date which is
seven years after the Completion Date except in either case in
respect of any bona fide claim intimated in writing (together
with reasonable details of the facts and circumstances giving
rise to such claim and a reasonable estimate of the aggregate
liability of the Warrantors in respect of such claim) by
notice to each of the Warrantors on or before the relevant
date provided always that legal proceedings in respect of such
claim (in the absence of settlement or discharge of such
claim) shall have commenced within twelve months after such
written notice is first served on the Warrantors;
(b) the liability of each of the Warrantors in respect of any
claim under the Warranties and in aggregate and/or the Tax
Undertaking shall not exceed an amount equal to the Relevant
Proportion of such claim(s);
(c) no claim shall be made against any of the Warrantors under the
Warranties and/or the Tax Undertaking unless and until the
amount thereof or the aggregate amount of all such claims
exceeds (pound)500,000 (excluding interest and costs) provided
that, the Warrantors shall be liable only for the excess above
(pound)500,000;
(d) the aggregate liability of the Warrantors for damages for
breach of the Warranties and/or the Tax Undertaking shall be
limited to (pound)30,000,000 (excluding interest and costs)
(other than the Title Warranties, which shall be limited to
the Consideration received by the Warrantor) provided that the
maximum aggregate liability of each Warrantor shall not exceed
his Relevant Proportion of the relevant limit;
(e) to the extent that the subject matter of a claim under any of
the Warranties is capable of remedy by the Warrantors, the
Purchaser shall, at the request of the Warrantors (or any of
them), afford to such Warrantor(s) such reasonable
opportunities as are requested by the Warrantors to remedy the
subject matter of the claim;
(f) the Warrantors shall not be liable under the Warranties:-
(i) in respect of any matter or liability to the extent
that specific provision (including, for the avoidance
of doubt, provision for specific matters contained in
any deferred tax provision and any obsolete stock
provision), accrual, or reserve or note in respect
thereof was made in the Accounts or the Management
Accounts;
(ii) to the extent that any provision, accrual, reserve or
note made as aforesaid proves insufficient only by
reason of any increase in rates of Tax or reduction of
allowances or reliefs made with retrospective effect
after the date of this Agreement;
46
(iii) to the extent that such liability would not have
arisen but for any alteration or enactment made after
the date of this agreement of any Act of Parliament
or statutory instrument or any change in
interpretation of any law following the Completion
Date or any change in administrative practice of any
government, governmental department, agency or
regulatory body or any increase in the rates of Tax
or alteration in methods of applying or calculating
Tax or any imposition of Tax not in effect at the
date of this Agreement;
(iv) to the extent that such liability would not have
arisen but for a voluntary act or failure to act,
omission or transaction on the part of by the
Purchaser and/or (at the instance of the Purchaser)
by the Company occurring after the Completion Date
and which the Purchaser was aware would be likely to
give rise to a liability on the Warrantors under the
Warranties. For the purpose of this sub-clause an act
will not be treated as voluntary if it is in the
ordinary course of business and/or if it is carried
out pursuant to a legal obligation which existed on
or before Completion;
(v) in respect of any liability which is contingent only,
unless and until such liability becomes an actual
liability and becomes due and payable provided,
however, a claim may be intimated pending
determination of such liability;
(vi) to the extent that such liability arises as a result
of the cessation of any business of any Group Company
after the Completion Date;
(vii) in respect of any matter contained in this Agreement
to the extent that it is fairly disclosed in the
Disclosure Letter.
(3) Without prejudice to the Purchaser's obligations under paragraph (5)
below, the Purchaser shall use its reasonable endeavours to consult
with the Warrantors and consider any representations of the Warrantors
following such consultation prior to any admission of liability,
compromise or settlement by the Purchaser or the Company in respect of
any matter which has given or may give rise to a claim under the
Warranties.
(4) The Purchaser shall notify the Warrantors of any matter in respect of
which a claim lies or may lie against the Warrantors under the
Warranties and/or the Tax Undertaking as soon as practicable after
becoming aware of such matter and of the fact that such claim lies or
may lie against the Warrantors and thereafter the Purchaser shall keep
the Warrantors reasonably and properly informed regarding such matter.
The Purchaser shall provide the Warrantors and to their professional
advisers such reasonable assistance as may be requested by the
Warrantors including reasonable access to all relevant books, records,
documents and other information and personnel for the purpose of
evaluating any claim and if the claim in question is in connection with
a claim made by, or a liability of, a third party, the Purchaser shall
take such action as the Warrantors may reasonably request to avoid,
dispute, resist, appeal or compromise or defend the relevant claim or
liability provided always that such one or more of the Warrantors
making such request shall have first agreed to indemnify and to free
and relieve and hold harmless the Purchaser from and against any loss,
cost, expenses or liability reasonably incurred by it as a result of
such action being taken.
(5) The Purchaser shall take all reasonable steps (and so far as within its
power shall procure that such steps are taken) to mitigate any loss or
liability which might give rise to a claim against the Warrantors under
this Agreement and, without prejudice to the generality of the
foregoing, procure that all reasonable endeavours are used to recover
any amounts due from third parties where, in relation to any matter
which may give rise to a claim under this Agreement, the Purchaser or
the Company has or may have a claim against such third parties.
Provided that nothing in this sub-clause will oblige the Purchaser to
delay pursuing any claim against the Warrantors pending the outcome of
any claim against any third party.
47
(6) In the event that the Warrantors have made a payment ("the claim
payment") pursuant to a claim under the Warranties and the Purchaser or
the Company shall receive from any source a refund or payment in
respect of the matter of which such claim was made and such claim
payment shall result in the Purchaser recovering more than the damage
or loss arising from the matter of which the claim was made, the
Purchaser shall forthwith repay to the relevant Warrantors by whom the
claim payment was made a sum corresponding to the lesser of (a) the
amount of such refund or payment, (b) the amount of the claim payment
in either case net of any Tax and expenses, and (c) the amount of the
recovery in excess of the damage or loss arising from the matter of
which the claim was made.
(7) Without prejudice to the Purchaser's obligations under paragraph (5)
above, where any claim against the Warrantors under the Warranties has
been settled such that the Purchaser has received a full recovery for
damage or loss for such matter and the Purchaser has a right of
recovery or reimbursement (in whole or in part) against any other
person in respect of the subject matter of such claim, the Purchaser
shall at the expense of the Warrantors assign or procure to be assigned
to the Warrantors, for no consideration, the benefit of such right up
to the amount paid by the Warrantors to the Purchaser in settlement of
such claim.
(8) Payment of any claim under any provision of this Agreement shall pro
tanto satisfy and discharge any other claim which is capable of being
made in respect of the same subject matter.
(9) Without prejudice to the generality of paragraph (6) above, the
Purchaser shall make no claim (other than for any retention,
deductibles or self-insured amounts) against the Warrantors and the
Warrantors shall not be liable under this Agreement if and to the
extent that the subject matter of any claim against the Warrantors is
covered by a policy of insurance and payment is made by the insurer
under such policy or under a similar policy effected by the Purchaser
or the Company; and the Purchaser shall procure that all appropriate
claims under such insurance are duly and timeously made and prosecuted
in good faith.
48
THE SCHEDULE
PART 6
TAX UNDERTAKING
BY
THE PERSONS WHOSE NAMES AND
ADDRESSES ARE GIVEN IN THE SCHEDULE
HERETO (hereinafter referred to as
"the Warrantors")
IN FAVOUR OF
XXXXXXXXXXX EURASIA LIMITED, (Reg
No. 2440463) having its Registered
Office at 00/00 Xxxxx Xxxx, Xxxxx
Xxxxxxxx, Xxxxxxx XX00 0XX
(hereinafter referred to as "the
Purchaser")
-------------------------------
1. DEFINITIONS AND INTERPRETATION
1.1 In the construction of this Tax Undertaking except as hereinafter
defined or as provided in the instance hereof, words and expressions
used in this Tax Undertaking shall have the same meanings as provided
in the Share Sale Agreement among Klaas Xxxxxxxx Xxxxx, one of the
Warrantors, and others and the Purchaser and Xxxxxxxxxxx International,
Inc. dated of even date herewith ("the Agreement") and Clauses 1.3 to
1.5 of the Agreement shall be deemed to be incorporated in this Tax
Undertaking mutatis mutandis:-
"Company" means all Group Companies
severally;
"Deferred Relief" means any Relief or right to
repayment of Tax which has been
treated as an asset in, or taken
into account in computing (and so
reducing) any provision for Tax or
deferred Tax which appears in, or
assumed to be available in
preparing the Accounts (or which,
but for the presumed availability
of such Relief would have appeared
in any such accounts);
"Demand" shall mean any assessment, notice,
demand or other document issued or
any claim made or action taken
after Completion by or on behalf of
any person, authority (whether
governmental, state, provincial,
local or municipal or a Tax
Authority) or body whatsoever
(whether of the United Kingdom or
elsewhere in the world) from which
it appears that a Tax liability is
or is sought to be imposed on the
Company or that the Company may be
deprived of or denied any Relief or
right to repayment of Tax;
"event" shall include, without limitation
the Corporate Restructuring and any
transaction, act, circumstance,
event or omission of whatever
nature and whether or not the
Company is a party thereto and
includes
49
(without limitation) a failure to
make sufficient distributions to
avoid an apportionment or deemed
distribution of income and
completion of the sale of the Sale
Shares to the Purchaser; and
reference to any event on or before
a date shall be deemed to include
(a) any combination of two or more
events, the first of which has
taken place on or before that date
and (b) any event which is deemed
for any Tax purpose to have taken
place on or before that date;
"Relief" shall mean any relief from Tax,
allowance, loss, exemption, set-off
or deduction in computing or
against income, profits or gains,
or credit against Tax granted by or
pursuant to any legislation or
otherwise for Tax purposes but
excludes a right to repayment of
Tax;
"Tax" shall mean all forms of taxation,
whether of the United Kingdom or
other parts of the world, including
(without prejudice to the foregoing
generality):-
(a) within the United Kingdom,
income tax (including income
tax required to be deducted or
withheld from or accounted for
in respect of any payment),
corporation tax, advance
corporation tax, value added
tax, inheritance tax, national
insurance and social security
contributions and any other
taxes, levies, duties,
charges, imposts or
withholdings whatsoever
(including those corresponding
to, similar to, replaced by or
replacing any of them), and
all costs, fines, penalties,
expenses, charges and interest
incidental or relating to the
same or to any late or
incorrect return in respect of
such taxes but specifically
excluding stamp duty.
(b) outside the United Kingdom,
identical or similar taxes to
those United Kingdom taxes
included in paragraph (a)
above, together with all other
taxes on gross or net income,
profits or gains and taxes on
receipts and sales and all
costs, fines, penalties,
expenses, charges and interest
incidental or relating to the
same or to any late or
incorrect return in respect of
such taxes;
regardless (in either case) of
whether any such taxes, levies,
duties, imposts, charges,
withholdings, penalties and
interest are chargeable directly or
primarily against or attributable
directly or primarily to the
Company, or any other person and of
whether any amount in respect of
any of them is recoverable from any
other person as mentioned in
paragraph 8 of this Tax Undertaking
but excluding in either case any
deferred tax;
50
"Tax Authority" shall mean any taxing or other
authority (whether within or
outside the United Kingdom)
competent to impose or administer
any Tax liability or make any
decision or ruling in respect
thereof.
1.2 References to any Tax liability of the Company shall include both
liabilities of the Company to make actual payments of or in respect of
Tax and also:-
1.2.1 the setting off against any income, profits or gains or any
liability of the Company to make an actual payment of or in
respect of Tax which were earned, accrued or received on or
before Completion or in respect of a period ended on or before
Completion or Tax thereon of any Relief or right to repayment
of Tax which arises as a consequence of or by reference to an
event occurring (or deemed to occur) after Completion or in
respect of a period commencing after Completion and not as a
consequence of or by reference to any event occurring (or
deemed to occur) on or before Completion or in respect of a
period ended on or before Completion in circumstances where,
but for such setting off, the Company would have had an actual
Tax liability in respect of which the Purchaser would have
been able to make a claim against the Warrantors under this
Tax Undertaking; but
1.2.2 the loss, reduction in the amount of, setting off against
profits or a Tax liability of the Company or unavailability
for whatever reason of any Deferred Relief or the inability of
the Company to set off any advance corporation tax arising or
falling due or paid by reference to an event occurring on or
prior to Completion against any Tax liability arising at any
time.
1.3 The amount that is to be treated for the purposes of this Tax
Undertaking as a Tax liability of the Company (the "Notional Tax
Liability") in any case falling within paragraph 1.2.1 or 1.2.2 of this
Tax Undertaking shall be determined as follows:
1.3.1 to the extent that the Relief or right to repayment of Tax
that was the subject of the setting off mentioned in that
paragraph was a deduction from or offset against Tax, the
Notional Tax Liability shall be the amount of that Relief or
right to repayment of Tax; and
1.3.2 to the extent that the Relief or right to repayment of Tax
that was the subject of the setting off mentioned in that
paragraph was a deduction from or offset against income,
profits or gains, the Notional Tax Liability shall be the
amount of Tax which has been saved in consequence of the
setting off.
1.4 References to:-
1.4.1 income, profits or gains earned, accrued or received on or
before a particular date or in respect of a particular period
shall include income, profits or gains which have been deemed
to have been earned, accrued or received on or before that
date or in respect of that period for the purposes of any Tax
and any development value and any other standard or measure
for the assessment of any Tax;
1.4.2 any payment or distribution as being made on or before a
particular date shall include:-
1.4.2.1 any payment or distribution which has fallen due to
be made on or before that date; and
1.4.2.2 any event which has occurred on or before that date
and is, or is deemed to be, a payment or distribution
for (in either case) the purposes of any Tax; and
51
1.4.3 any dividend shall include anything which is deemed to be a
dividend or distribution for the purposes of any Tax.
2. UNDERTAKING
2.1 Subject as hereinafter expressly provided, each of the Warrantors
hereby undertakes for his own account only in the Relevant Proportion,
and not jointly and severally, with and to the Purchaser to pay to the
Purchaser (so far as possible by way of repayment of the consideration
payable under the Agreement for the Sale Shares) an amount equal to the
following:-
2.1.1 any Tax liability of the Company arising as a consequence of
or by reference to any event which occurred or was entered
into on or before Completion or was deemed to occur on or
before Completion for the purposes of any Tax; or
2.1.2 any Tax liability of the Company arising in respect of or by
reference to any income, profits or gains earned, accrued or
received on or before or in respect of a period ended on or
before Completion; and/or
2.1.3 any depletion in or reduction in value of the assets or
increase in the liabilities of the Purchaser and/or the
Company as a result of any Inheritance Tax which:-
2.1.3.1 is at Completion a charge on any of the shares or
assets of the Company or gives rise to a power to
sell, mortgage or charge any of the shares or assets
of the Company; or
2.1.3.2 after Completion becomes a charge on or gives rise to
a power to sell, mortgage or charge any of the shares
or assets of the Company being a liability in respect
of Inheritance Tax payable as a result of the death
of any person within seven years after a transfer of
value (or a deemed transfer of value) if a charge on
or power to sell, mortgage or charge any such shares
or assets existed at Completion or would, if the
death had occurred immediately before Completion and
the Inheritance Tax payable as a result thereof had
not been paid, have existed at Completion; or
2.1.3.3 arises as a result of a transfer of value occurring
on or before Completion (whether or not in
conjunction with the death of any person whenever
occurring) which increased or decreased the value of
the estate of the Company;
2.1.4 any Tax liability of the Company for which the Company becomes
liable in consequence of the failure by:-
2.1.4.1 any company (other than any other Group Company)
which has at any time (whether before or after
Completion) (a) been a member of a group (as defined
from time to time for any Taxation purpose) of which
the Group Company concerned has at any time prior to
Completion been a member and/or (b) been under the
control of any person who at any time prior to
Completion had control of any Group Company; or
2.1.4.2 any company (other than any other Group Company) from
which the Group Company has received or become
entitled to receive on or before Completion in
respect of shares in that other company any capital
distribution (as defined in section 122(5)(b) of the
TCGA); or
2.1.4.3 any trustees of an employee share ownership trust
(within the meaning of Schedule 5 to FA 1989)
established by the Group Company before
52
Completion or to which a sum has been paid by the
Group Company before Completion; or
2.1.4.4 any other person
to discharge Tax within a specified period or otherwise;
provided that in the case of sub-paragraph 2.1.4.4 above this
paragraph 2.1.4 shall only apply insofar as such Tax arises as
a result of profits earned, accrued or received or an event
entered into, effected or occurring on or before Completion;
2.2 any costs and expenses properly and reasonably incurred by the
Purchaser or the Company in connection with any such Tax liability as
is referred to in paragraph 2.1 above or with any Demand therefor.
3. LIMITATIONS AND EXCLUSIONS
3.1 The Warrantors shall not be liable under the undertaking contained in
paragraph 2 of this Tax Undertaking in respect of any Tax liability of
the Company:-
3.1.1 to the extent that provision or reserve in respect thereof was
made in the Accounts or to the extent that payment or
discharge of such Tax liability was taken into account
therein; or
3.1.2 to the extent that such Tax liability arises or is increased
or such provision or reserve in respect thereof as is
mentioned in paragraph 3.1.1 of this Tax Undertaking is
insufficient by reason only of the imposition of new forms of
Tax or increase in the rates of Tax as a consequence of any
change in law or in Inland Revenue or Customs and Excise or
other Tax Authority's published practice or procedure or in
generally accepted accountancy practice or principles
occurring, made or first published after Completion and in any
such case with retrospective effect; or
3.1.3 to the extent that any amount in respect of a particular
matter otherwise subject to the undertaking contained in
paragraph 2 of this Tax Undertaking has been recovered under
any of the Warranties in respect of the same matter; or
3.1.4 arising in respect of or by reference to any income, profits
or gains earned, accrued or received in the ordinary course of
business after the Accounts Date but on or before Completion;
or
3.1.5 to the extent that any such Tax liability can be mitigated by
Reliefs or rights to repayment of Tax other than such Reliefs
as are referred to in paragraph 1.2 of this Tax Undertaking,
provided that the Purchaser and the Company shall be entitled
to use any Reliefs and/or rights to repayment of Taxation in
such manner as they consider appropriate; or
3.1.6 which would not have arisen but for a voluntary act,
transaction or omission by the Company or the Purchaser
carried out or occurring after Completion otherwise than in
the ordinary course of business; or
3.1.7 to the extent that it would not have arisen but for a change
in the accounting practices or polices adopted for future
accounts of the Company (save insofar as is necessary to
comply with generally accepted accounting practice or
principles in force as at Completion) or to the extent it is
attributable to timing differences.
3.2 The limitations and stipulations contained in Clause 6 of the Agreement
and Part 5 of the Schedule shall apply for the purposes of this Tax
Undertaking to the extent specified therein.
53
4. NOTIFICATION OF CLAIMS
4.1 Without prejudice to any other provision of this Tax Undertaking, if
the Purchaser or the Company shall become aware of any Demand which may
or will result in any claim against the Warrantors under this Tax
Undertaking, the Purchaser shall as soon as reasonably practicable give
or procure the giving of written notice thereof to the Warrantors
setting out reasonable details of the Demand.
4.2 Subject to Clause 4.3 and to the Warrantors indemnifying and securing
the Purchaser and/or the Company to the Purchaser's reasonable
satisfaction against any costs, claims, liabilities and expenses
(including interest on overdue Tax) which may be incurred thereby, the
Purchaser shall procure at the request in writing of or on behalf of
the Warrantors that the Company shall give the Warrantors such
reasonable co-operation and assistance for the purposes of disputing,
resisting, appealing, compromising or defending such Demand or any
further Demand arising therefrom as aforesaid as the Warrantors may
reasonably by written notice request.
4.3 The Purchaser and the Company shall be at liberty without reference to
the Warrantors to admit, compromise, settle, discharge or otherwise
deal with any Demand if the Warrantors decline to give, or delay
unreasonably in giving or fail to give within 14 days of the relevant
notice given to them pursuant to Clause 4.1, any such request as is
mentioned in Clause 4.2 above, in which case the liability of the
Warrantors hereunder shall not be diminished or extinguished on the
grounds that the Purchaser or the Company took or omitted to take any
action with regard to such claim.
4.4 The actions which the Warrantors may reasonably request under paragraph
4.2 of this Tax Undertaking shall include (without limitation) the
Company applying to postpone (so far as legally possible) the payment
of any tax and/or (subject to the approval of the Purchaser (such
approval not to be unreasonably withheld or delayed)) the instruction
of such solicitors or other professional advisers as the Warrantors may
nominate to act on behalf of the Company to the intent that the conduct
and costs and expenses of the dispute shall be delegated entirely to
and be borne solely by the Warrantors, provided that neither the
Purchaser nor the Company shall be required to take any action if, in
the Purchaser's reasonable opinion, such action would be unduly onerous
or materially prejudicial to the Purchaser or the Company or their
respective business or would increase any future liability to Taxation
of the Purchaser and/or the Company.
4.5 In connection with the conduct of any dispute relating to a Tax
liability to which this Tax Undertaking applies:-
4.5.1 the Warrantors shall keep the Purchaser fully informed of any
relevant matters and shall promptly forward, or procure to be
forwarded, to the Purchaser copies of all correspondence and
other written communications pertaining to it;
4.5.2 no correspondence shall be made to any Tax Authority without
the Purchaser having been given a period of not less than ten
Business Days to review and comment on the same and the
Warrantors shall incorporate any reasonable comments of the
Purchaser made within such period;
4.5.3 no settlement or compromise shall be made of the matter which
is the subject of the dispute nor any agreement reached in
respect of any matter in its conduct which is likely to
increase the amount of the resulting Tax liability without the
prior written approval of the Purchaser (which shall not be
unreasonably withheld or delayed);
4.5.4 neither the Purchaser nor the Company shall be required to
take any action which is unlawful, or which involves
contesting any Tax assessment before any court or other
appellate body unless the Warrantors (at their own cost and
expense) furnish the
54
Purchaser with the written opinion of Tax Counsel of at least
ten years standing to be chosen by agreement of the parties
(or failing which to be chosen by the President of the Law
Society of Scotland) to the effect that an appeal against the
Tax assessment will on the balance of probabilities be
successful. Such Tax Counsel shall be entitled (at the cost
and expense of the Warrantors) to obtain opinions from any
overseas advisers whom be considered appropriate in respect of
any overseas Tax matters in forming his opinion; and
4.5.5 neither the Purchaser nor the Company shall be obliged to
appeal against any assessment where it is a condition of such
appeal being made that all or any part of the Tax to which the
assessment in question relates is paid to the relevant Tax
Authority unless the Warrantors have paid to the Purchaser an
amount equal to the payment which requires to be made to the
relevant Tax Authority. If the whole or part of the payment is
subsequently recovered by the Purchaser it shall to that
extent be immediately repaid to the Warrantors together with
any repayment supplement.
5. TAX RETURNS
5.1 The Warrantors or their duly authorised agents shall prepare in
conjunction with and with the approval of the Purchaser, which approval
shall not be unreasonably withheld, the tax returns of the Company for
all accounting periods ended on or prior to Completion, to the extent
that the same shall not have been prepared before Completion and
subject to Clause 5.2 shall deal with all matters (including
correspondence) relating to the tax returns of the Company for all
accounting periods ended on or prior to Completion provided full
indemnity for such matters is provided by the Warrantors. The Purchaser
shall procure that the Company shall afford such access to their books,
accounts and records as is necessary and reasonable to enable the
Warrantors or their duly authorised agents to prepare those returns and
conduct matters relating thereto in accordance with the Warrantors'
rights under this Tax Undertaking.
5.2 The Purchaser shall (provided that the Purchaser shall have been given
a period of not less than ten Business Days to comment on the same)
cause the returns mentioned in paragraph 5.1 of this Tax Undertaking to
be authorised, signed and submitted to the appropriate authority
without amendment or with such amendments as the Warrantors shall agree
(and the Warrantors shall incorporate any reasonable comments of the
Purchaser made prior to the expiry of such ten Business Day period),
and shall give the Warrantors or their agents all such assistance (at
the cost and expense of the Warrantors) as may be required to agree
those returns with the appropriate authorities provided that the
Purchaser shall be entitled to refuse to cause any such returns to be
signed if they consider the return to be incorrect and in the case of
any dispute as to the correctness of the return between the Warrantors
and the Purchaser the matter shall be referred to a Tax Counsel of at
least ten years standing agreed between the parties or, failing
agreement, nominated on the application of either the Warrantors or the
Purchaser by the President for the time being of the Law Society of
Scotland for resolution (acting as an expert and not as an arbiter and
whose costs shall be borne as between the Warrantors and the Purchaser
in such manner as they shall agree or as he shall direct) and (save in
the case of manifest error) the decision of such Tax Counsel shall be
final and binding on the parties and the Purchaser shall cause to be
signed the return in the form which is so resolved to be correct.
6. PAYMENT OF CLAIMS
6.1 Payments by the Warrantors pursuant to the undertaking in paragraph 2
of this Tax Undertaking shall be made on the day or date specified in
paragraph 6.2 below.
6.2 The days and dates referred to in paragraph 6.1 above are as follows:-
6.2.1 if the Tax liability giving rise to a claim under this Tax
Undertaking involves an actual payment of Tax by the Company
the date which is three Business Days prior to
55
the last day on which that Tax may be paid by the Company to
the relevant Tax Authority in accordance with the relevant Tax
legislation without incurring a liability to interest or a
charge or penalty in respect of the non-payment of that Tax
liability;
6.2.2 if the Tax liability giving rise to a claim under this Tax
Undertaking does not involve an actual payment of Tax:-
6.2.2.1 if involving the setting off in whole or in part of
any Relief or right to repayment of Tax, the date on
which the Tax saved thereby would otherwise have
become fully due and payable to the relevant Tax
Authority in accordance with the relevant Tax
legislation; or
6.2.2.2 if involving the loss, non-availability or reduction
in the amount of any Relief, the date on which any
Tax first becomes payable to the relevant Tax
Authority in accordance with the relevant Tax
legislation but for the loss, non-availability or
reduction in question;
6.2.2.3 if involving the loss, non-availability of or
reduction in the amount of a right to repayment of
Tax, the earliest date upon which the repayment of
Tax would have been obtained from the relevant Tax
Authority in accordance with the relevant Tax
legislation but for the loss, non-availability or
reduction in question;
6.2.2.4 in any case other than as referred to in paragraphs
6.2.2.1 to 6.2.2.3 (inclusive) above, the date
falling seven days after the date when the Warrantors
have been notified by the Company or the Purchaser of
the making of a claim under this Tax Undertaking;
6.2.3 in the case of the costs and expenses referred to in paragraph
2 of this Tax Undertaking, seven Business Days after the date
on which the Purchaser or the Company produce properly
receipted invoices in respect thereof to the Warrantors.
6.3 If the Warrantors shall fail to pay any sum due by them under this Tax
Undertaking on the due date for payment in accordance herewith then,
except to the extent that the Warrantors' liability under paragraph 2
of this Tax Undertaking compensates the Purchaser for that late payment
by virtue of its extending to interest and penalties, the Warrantors
shall pay interest thereon from such date until the date when payment
is actually made in full (as well after as before any decree) at the
rate of two per cent per annum above the base rate from time to time of
the Bank of Scotland.
7. NO WITHHOLDINGS
7.1 All sums payable by the Warrantors under this Tax Undertaking shall be
paid free and clear of all deductions or withholding or set-off unless
the deduction or withholding or set-off is required by law.
7.2 If any deduction or withholding or set-off is required by law to be
made from any sums, the Warrantors shall be obliged to pay to the
Purchaser such amount as will, after the deduction or withholding or
set-off has been made, leave the Purchaser with the same amount as it
would have been entitled to receive in the absence of such requirement
to make a deduction or withholding or set-off.
7.3 If any Tax Authority brings into charge to Tax any sum paid to the
Purchaser under this Tax Undertaking, the amount so payable shall be
increased so that, after deduction of the Tax so chargeable, there
shall be left a sum equal to the amount that would otherwise be
payable.
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8. RECOVERY FROM THIRD PARTY
8.1 Subject to paragraph 8.3, if the Company recovers any sum (whether by
payment, discount, credit or otherwise) from any third party (including
any Tax Authority), or receives any repayment of Tax (including any
repayment supplement) in respect of any Tax liability, for which a
claim could be made or has been made under this Tax Undertaking the
amount so recovered, less the reasonable costs incurred by the Company
in recovering or obtaining repayment of the same, shall:-
8.1.1 if the Warrantors have at the time of the recovery or
repayment made payment under this Tax Undertaking in respect
of that Tax liability, be paid forthwith to the Warrantors to
the extent not exceeding the amount so paid by the Warrantors
(but without prejudice to the right of the Purchaser to
recover from the Warrantors under this Tax Undertaking if a
further Tax liability is imposed upon the Company, whether in
respect of matters to which the recovery or repayment relates
or otherwise);
8.1.2 if a claim has been made pursuant to this Tax Undertaking in
respect of that Tax liability but the Warrantors have not at
the time of recovery or repayment made payment in respect
thereof, be set against and reduce the claim against the
Warrantors in respect of such Tax liability (but without
prejudice to the right of the Purchaser to recover from the
Warrantors under this Tax Undertaking if a further Tax
liability is imposed upon the Company, whether in respect of
matters to which the recovery or repayment relates or
otherwise);
8.1.3 if no claim has been made pursuant to this Tax Undertaking in
respect of that Tax liability at the time of recovery or
repayment, be set against and reduce any claim that
subsequently may be made against the Warrantors in respect of
such Tax liability (but without prejudice to the right of the
Purchaser to recover from the Warrantors under this Tax
Undertaking if a further Tax liability is imposed upon the
Company, whether in respect of matters to which the recovery
or repayment relates or otherwise).
8.2 Upon the Company becoming aware of its ability to recover any amount as
is mentioned in paragraph 8.1 of this Tax Undertaking it shall promptly
notify the Warrantors and thereafter shall keep the Warrantors fully
informed of the progress of any action taken.
8.3 The provisions of paragraph 8.1 shall not apply to any sum recovered
where the recovery in question arises from the use by the Purchaser or
the Company of a Relief or right to repayment of Tax of a type referred
to in paragraph 1.2.1 or 1.2.2.
9. GROUP RELIEF
9.1 The Purchaser may by notice in writing to the Warrantors require the
Warrantors to procure that:-
9.1.1 Ascari and IWT shall surrender to such company or companies as
the purchaser shall notify to the Warrantors any Group Relief
to the extent permitted by law but without any payment being
made by the Purchaser or the recipient of such Group Relief in
consideration of such surrender; and
9.1.2 Ascari and IWT sign all such deeds, documents and forms as may
be necessary to surrender the Group Relief referred to in
Clause 9.1.1 above.
9.2 In this Clause 9, Group Relief means:-
9.2.1 any relief surrendered or claimed pursuant to Chapter IV of
Part X of ICTA;
9.2.2 any advance corporation tax surrendered or claimed pursuant to
section 240 ICTA; and
57
9.2.3 any refund of Tax surrendered or claimed pursuant to section
102 FA 1989.
10. ILLEGALITY/SEVERABILITY
10.1 If at any time any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither
the legality, validity or enforceability of the remaining provisions of
this Tax Undertaking in that or any other jurisdiction or the legality,
validity or enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby.
10.2 Each of the indemnities and undertakings on the part of the Warrantors
contained in this Tax Undertaking shall be construed separately and
(save as otherwise expressly provided herein) none of the said
indemnities and undertakings shall limit or govern the extent,
application or construction of any other of them and notwithstanding
that any such indemnity or undertaking may prove to be illegal or
unenforceable the remaining such indemnities and undertakings shall
continue in full force and effect.
11. EFFECT OF DISCHARGE OF CLAIM
For the avoidance of doubt, the Warrantors shall remain liable in
accordance with the terms of this Tax Undertaking notwithstanding that
any Tax giving rise to a liability to make a payment under paragraph 2
of this Tax Undertaking is or has been discharged or suffered by the
relevant Group Company, whether before or after the date hereof and
whether by payment or by the loss or utilisation of any Relief or right
to repayment of Tax.
12. EFFECT OF WAIVER, RELEASE, ETC. AND FAILURE OR DELAY
12.1 Any liability to the Purchaser hereunder may in whole or in part be
released, compounded or compromised or time or indulgence given by the
Purchaser in its absolute discretion as regards any of the Warrantors
under such liability without in any way prejudicing or affecting its
rights against any other or others of the Warrantors under the same or
a like liability whether joint and several or otherwise.
12.2 No failure or delay by the Purchaser or the Warrantors to exercise any
right or power hereunder shall operate as a waiver thereof nor shall
any partial exercise preclude any other or further exercise or the
exercise of any other right.
13. STAMP DUTY
Each of the Warrantors hereby warrants to the Purchaser for his own
account only in the Relevant Proportion and not jointly and severally
that all documents forming part of the title to any asset of the
Company or which the Company may wish to enforce or produce in evidence
are duly stamped and have where appropriate been adjudicated. The
Warrantors hereby agree that in the event of a breach of this warranty
they shall forthwith upon demand by the Purchaser pay to the Purchaser
by way of liquidated damages an amount equal to any unpaid stamp duty
and any interest or penalties payable in respect thereof.
14. ASSIGNATION
The provisions of Clause 12 of the Agreement shall have effect as if
set out in full herein.
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15. NOTICES
The provisions of Clause 16 of the Agreement shall have effect as if
set out in full herein.
16. GOVERNING LAW
This Tax Undertaking shall be governed by and construed in all respects
in accordance with the laws of Scotland and the parties hereto
irrevocably prorogate the non-exclusive jurisdiction of the Scottish
Courts.
IN WITNESS WHEREOF these presents consisting of this page and the previous pages
are executed on 2 September 1999 as follows:-
Xxxxx Xxxxxxxx Xxxxx
Xxxxxx Xxxxxxx Xxxxx
Xxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxxxx Xxxxxxxx
SUBSCRIBED for and on behalf of Xxxxxxxxxxx Eurasia Limited by one of its
directors in the presence of-
Xxxxxxxxxxx Eurasia Limited