Transitional Services Agreement between Weatherford International, Inc. and Weatherford Global Compression Services, L.P. (February 9, 2001)

Summary

This agreement is between Weatherford International, Inc. and Weatherford Global Compression Services, L.P. Under the agreement, Weatherford will provide certain business services to the Partnership for a limited period following a merger. The services include all current services (except legal) for the first 30 days, then a reduced set for up to 120 days. The Partnership will pay Weatherford specified fees and reimburse costs. Either party can end specific services early if no longer needed. The agreement ensures a smooth transition of operations after the merger.

EX-10.1 5 h84190ex10-1.txt TRANSITIONAL SERVICES AGREEMENT 1 EXHIBIT 10.1 TRANSITIONAL SERVICES AGREEMENT BETWEEN WEATHERFORD INTERNATIONAL, INC. AND WEATHERFORD GLOBAL COMPRESSION SERVICES, L.P. FEBRUARY 9, 2001 2 EXHIBIT 10.1 TRANSITIONAL SERVICES AGREEMENT This Transitional Services Agreement (this "Agreement") is entered into as of February 9, 2001, between Weatherford International, Inc., a Delaware corporation ("Weatherford"), and Weatherford Global Compression Services, L.P., a Delaware limited partnership, on behalf of itself and each of its affiliates (collectively, the "Partnership"). W I T N E S S E T H WHEREAS, Enterra Compression Company, a Delaware corporation (the "Company"), WEUS Holding, Inc., a Delaware corporation and a stockholder of the Company ("WEUS"), Weatherford International, Inc., a Delaware corporation and the parent of WEUS ("Weatherford"), Universal Compression Holdings, Inc., a Delaware corporation ("Parent"), and Universal Compression, Inc., a Texas corporation and wholly owned subsidiary of Parent ("Merger Subsidiary"), are parties to a certain Agreement and Plan of Merger ("Merger Agreement"), dated as of October 23, 2000; WHEREAS, pursuant to the Merger Agreement, Parent has agreed to acquire the Partnership and certain of its affiliates by way of a merger of the Company, as the parent of such entities, with and into Merger Subsidiary, with Merger Subsidiary being the surviving corporation in such merger (the "Merger"); and WHEREAS, prior to the Merger, Weatherford will acquire all of the interest held by GE Capital Corporation, a New York corporation, in the Partnership and related assets and operations under the terms of that certain Purchase Agreement dated October 23, 2000 (the "GC Agreement") by and among Weatherford, WEUS, the Company and Global Compression Services, Inc., a Delaware corporation, such that, immediately after the Merger, Parent will own 100% of the Partnership, its related assets and operations (other than the Excluded Assets, as such term is defined in the Merger Agreement); WHEREAS, it is a condition precedent to the consummation of the transactions contemplated by the Merger Agreement and the GC Agreement that Weatherford and the Partnership enter into this Agreement; WHEREAS, Weatherford and the Partnership desire for Weatherford and its affiliates to provide certain services to the Partnership for a limited time following the consummation of the mergers contemplated by the Merger Agreement and the GC Agreement; and NOW, THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree as follows: ARTICLE 1 DEFINITIONS All capitalized terms or other defined terms used but not defined in this Agreement are used in this Agreement with the meanings assigned thereto in the Merger Agreement. 3 ARTICLE 2 SERVICES 2.1 SERVICES. From and after the Effective Time until the 30th day after the Effective Time (the "Initial Services Period"), Weatherford agrees to provide, or cause its affiliates to provide, to the Partnership all services currently provided to the Partnership and its affiliates prior to the Effective Time, except for legal services (the "Full Services"). From the 31st day to the 120th day after the Effective Time (the "Partial Services Period", and together with the Initial Services Period, the "Services Periods"), Weatherford agrees to reasonably provide, or cause its affiliates to reasonably provide, to the Partnership the services relating to the areas set forth on Exhibit A hereto (the "Partial Services", and together with the Full Services, the "Service(s)"); provided, however, that with respect to Services provided in the area of insurance and risk management, Weatherford will continue to administer all claims relating to the Partnership that are for periods prior to the Effective Time and that are covered under Weatherford's existing insurance program. All losses, costs, fees and expenses (including deductibles) relating to such claims and Weatherford's administration thereof shall be the sole responsibility of the Partnership. 2.2 EARLY TERMINATION OF SERVICES. Notwithstanding anything to the contrary in this Agreement, the Partnership shall use commercially reasonable efforts to eliminate its need for the Services prior to the expiration of the Services Periods. With respect to any Service (or portion thereof) that the Partnership no longer requires Weatherford or its affiliates to perform, the Partnership shall promptly notify Weatherford that such Service (or portion thereof) is no longer required, and from and after receipt by Weatherford of such notice, such Service (or portion thereof) will no longer be required under this Agreement, and neither Weatherford nor the Partnership will have any further obligations with respect thereto, including but not limited to, compensation and reimbursement for such Service; provided, however, that the Partnership shall not be relieved of its obligation to pay the Partnership for all such Service(s) provided to the Partnership prior to the time of termination of such Service(s). 2.3 COMPENSATION AND REIMBURSEMENT. In connection with the provision of the Full Services, Weatherford will charge the Partnership $125,000 plus all additional costs and third party expenses incurred by Weatherford relating to the provision of the Full Services. In connection with the provision of the Partial Services, Weatherford will allocate to the Partnership a proportional amount of the costs and expenses of Weatherford's respective departments to the extent they relate to matters associated with the Partial Services. The Partnership agrees to pay Weatherford for such proportional amount and for all additional costs, fees, expenses, penalties, taxes and interest incurred by Weatherford relating to the provision of the Partial Services. Provided, however, that in connection with the provision of the Services, Weatherford shall not incur individual third party expenses on a monthly basis in excess of $7,500 without the prior written consent of the Partnership. Weatherford will prepare and submit to the Partnership a monthly statement of account and invoice setting forth in reasonable detail the amounts owed by the Partnership pursuant to this Article 2 for the immediately preceding month. In consideration for Weatherford's agreement to provide and administer the Partial Services under this Agreement, the Partnership also agrees to pay to Weatherford beginning on the 31st day following the Effective Time a management fee equal to 10% of the total amount of the proportional amount of the costs and expenses of the various Weatherford departments allocated 2 4 to the Partnership. Such management fee shall be added to each monthly statement of account and invoice sent to the Partnership. The Partnership agrees to pay to Weatherford, by wire transfer in immediately available U.S. funds, all amounts owed and due under this Agreement within 30 days of receipt of such monthly statement of account and invoice. Interest at the rate of 10% per annum, compounded monthly, will accrue and will be payable with respect to any amounts due and not paid by the Partnership until such amounts, and any interest thereon, have been paid. 2.4 TERM AND TERMINATION. Subject to the provisions of Section 2.2 hereof, the term of this Agreement shall commence at the Effective Time and shall continue until the end of the Services Periods or until Weatherford and the Partnership agree in writing to terminate this Agreement. The termination of this Agreement shall not release (i) either party from its liability to the other party under this Agreement arising from a breach of this Agreement, (ii) either party from its rights and obligations under Article 3, or (iii) the Partnership from its payment obligations under Sections 2.1 and 2.3. ARTICLE 3 ALLOCATION OF LIABILITY; RELATIONSHIP 3.1 WAIVER AND INDEMNIFICATION. THE PARTNERSHIP HEREBY WAIVES ANY AND ALL CLAIMS AGAINST WEATHERFORD, ITS AFFILIATES AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS (THE "WEATHERFORD PARTIES") FOR DAMAGES RESULTING FROM PERFORMANCE OF, ERROR OR DELAY IN PERFORMANCE, ATTEMPTING TO PERFORM OR FAILING TO PERFORM, ANY RESPONSIBILITIES HEREUNDER, OR ANY DAMAGES OF ANY KIND RELATED THERETO, INCLUDING CLAIMS ARISING AS A RESULT OF THE EXPRESS NEGLIGENCE OF SUCH PERSONS UNLESS SUCH DAMAGES RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PERSONS. FURTHER, THE PARTNERSHIP HEREBY AGREES TO DEFEND, INDEMNIFY, AND HOLD WEATHERFORD, ITS AFFILIATES AND THEIR RESPECTIVE DIRECTORS, OFFICERS, AGENTS, AND EMPLOYEES HARMLESS TO THE EXTENT OF THE PARTNERSHIP'S PARTICIPATION THEREIN AGAINST ANY AND ALL CLAIMS, DAMAGES, CAUSES OF ACTION, AND LEGAL LIABILITIES ARISING OUT OF, IN CONNECTION WITH, OR AS AN INCIDENT TO, THIS AGREEMENT OR ANY ACT OR OMISSION IN THE PERFORMANCE BY SUCH PERSONS OF THEIR RESPONSIBILITIES HEREUNDER, INCLUDING DAMAGES, CAUSES OF ACTION, AND LEGAL LIABILITIES ARISING AS A RESULT OF THE NEGLIGENCE OF SUCH PERSONS, UNLESS SUCH DAMAGES RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PERSONS SEEKING INDEMNIFICATION. 3.2 LIMITATION ON WARRANTIES AND CONSEQUENTIAL DAMAGES. NONE OF THE WEATHERFORD PARTIES MAKES ANY WARRANTIES OR REPRESENTATIONS REGARDING SERVICES PROVIDED PURSUANT TO THIS AGREEMENT OTHER THAN THOSE EXPRESSED IN THIS AGREEMENT, AND NONE OF THE WEATHERFORD PARTIES MAKES ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR 3 5 PURPOSE. SUCH SERVICES ARE FURNISHED ON AN "AS IS" BASIS, AND NONE OF THE WEATHERFORD PARTIES ASSUMES ANY RESPONSIBILITY FOR ANY DAMAGE OR LOSS (INCLUDING, WITHOUT LIMITATION, ANY CONSEQUENTIAL, EXEMPLARY OR SPECIAL DAMAGES OR LOST PROFITS) ARISING OUT OF, RESULTING FROM, OR CAUSED BY SERVICES FURNISHED. 3.3 EXPRESS NEGLIGENCE. THE INDEMNITIES SET FORTH IN THIS ARTICLE 3 ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING TEXAS' EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE, OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF ANY OF THE WEATHERFORD PARTIES. 3.4 INDEPENDENT CONTRACTOR. IN PERFORMING THE SERVICES HEREUNDER, THE PARTNERSHIP AND WEATHERFORD ACKNOWLEDGE AND AGREE THAT THE WEATHERFORD PARTIES AND THEIR RESPECTIVE REPRESENTATIVES SHALL BE CONSIDERED INDEPENDENT CONTRACTORS WITH RESPECT TO THE PARTNERSHIP AND SHALL UNDER NO CIRCUMSTANCES BE DEEMED TO BE AN EMPLOYEE, AGENT, PARTNER, OR JOINT VENTURER OF THE PARTNERSHIP. ADDITIONALLY, WEATHERFORD SHALL HAVE THE EXCLUSIVE AUTHORITY AND RESPONSIBILITY TO SELECT THE MEANS, MANNER, AND METHOD OF PERFORMING THE SERVICES REQUIRED TO BE CAUSED TO BE PERFORMED BY IT HEREUNDER. ARTICLE 4 MISCELLANEOUS 4.1 AUDIT RIGHT. Upon reasonable prior written request, the Partnership shall have the right to audit Weatherford's calculations, and schedules thereto, of the costs and expenses for the Services provided hereunder. Upon the request of the Partnership, Weatherford shall provide the Partnership with copies of invoices relating to any third party costs and expenses relating to the Services. 4.2 COMPLETE AGREEMENT; AMENDMENT. This Agreement constitutes the entire agreement between Weatherford and the Partnership with respect to the subject matter hereof and supersedes all other agreements, representations, warranties, statements, promises, and understandings, whether oral or written, with respect to the subject matter hereof. This Agreement may not be amended, altered, or modified except by a writing signed by duly authorized officers of Weatherford and the Partnership. 4.3 NOTICES. (a) Addresses. All notices under this Agreement must be in writing and delivered by personal service; certified or registered mail, postage prepaid, return receipt requested; 4 6 nationally-recognized overnight courier, courier charges prepaid; or facsimile transmission (followed by telephone confirmation of receipt), to Weatherford or the Partnership, as applicable, at the addresses herein set forth. The addresses for notices are as follows: Weatherford International, Inc. 515 Post Oak Park, Suite 600 Houston, Texas 77027-3415 Attention: Vice President - Law Facsimile: (713) 693-4481 Confirm: (713) 693-4178 Weatherford Global Compression Services, L.P. 4440 Brittmore, Road Houston, Texas 77041 Attention: Chief Financial Officer Facsimile: (713) 466-6720 Confirm: (713) 335-7226 (b) Effective Date of Notices, etc. All notices, demands, and requests will be effective upon actual receipt or, in the case of delivery by facsimile transmission, the completion of such transmission during the normal business hours of the recipient. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given as provided in Section 4.3(c) will be deemed to be receipt of the notice, demand, or request sent. (c) Changes. By giving to the other party at least 10 Business Days' written notice thereof, a party and its respective permitted successors and permitted assigns will have the right from time to time and at any time during the term of this Agreement to change their respective addresses for notices and each will have the right to specify, as its or his address for notices, any other address within the United States of America. 4.4 VALIDITY. Any provision hereof that is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction. 4.5 ASSIGNMENT; OTHER BENEFITS. This Agreement will be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns. Neither party to this Agreement may assign its rights under this Agreement without the prior written consent of the other party; provided, however, that Weatherford may assign any of its rights and obligations under this Agreement to any of its affiliates, of which Weatherford beneficially owns or controls at least 50% of the equity or other interests of such affiliate, without the consent of the Partnership. 5 7 4.6 GOVERNING LAW. This Agreement will be governed by, and construed in accordance with, the internal laws of the State of Texas, without reference to or application of any conflicts of laws principles. 4.7 WAIVER. No consent or waiver, express or implied, by a party hereto to or of any breach or default by the other party hereto in the performance by such other party of its obligations hereunder will be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such other party of the same or any other obligations of such other party hereunder. Failure on the part of a party to complain of any act or failure to act of the other party or to declare the other party in default, irrespective of how long such failure continues, will not constitute a waiver by such party of its rights hereunder. The giving of consent by a party in any one instance will not limit or waive the necessity to obtain such party's consent in any future instance. 4.8 TERMINOLOGY; HEADINGS. All personal pronouns used in this Agreement, whether used in the masculine, feminine, or neuter gender, will include all other genders; and the singular will include the plural and vice versa. The headings of the Articles and Sections of this Agreement are included for convenience only and will not be deemed to constitute part of this Agreement or to affect the construction hereof or thereof. 4.9 FORCE MAJEURE. Except for the obligation of the Partnership to make payments hereunder when due and the indemnification obligations arising hereunder, neither party shall be liable for delays in performance or for non-performance, directly occasioned or caused by Force Majeure. "Force Majeure" means any event beyond the reasonable control of the party claiming to be affected thereby including without limitation acts of God, storms, floods, war, fire, strikes, lockouts or differences with workers, acts of the public enemy, insurrections, riots, or rules or regulations of any governmental authority asserting jurisdiction or control, compliance with which makes continuance of operations impossible. Inability of either party to secure funds shall not be regarded as Force Majeure. Upon the occurrence of Force Majeure, the party affected shall give prompt notice thereof to the other party and shall, at its cost and expense, do all things reasonable to remove or mitigate its effect. 4.10 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will for all purposes be deemed to be an original and all of which will constitute the same instrument. 4.11 FURTHER ASSURANCES. Each party agrees to do all acts and things and to make, execute, and deliver such written instruments, as will from time to time be reasonably required to carry out the terms and provisions of this Agreement. [Remainder of page intentionally left blank - Signature page follows] 6 8 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth in the introduction to this Agreement. WEATHERFORD INTERNATIONAL, INC. By: /s/ BURT M. MARTIN ------------------------------- Name: Burt M. Martin Title: Vice President WEATHERFORD GLOBAL COMPRESSION SERVICES, L.P. By: Weatherford Global Compression Holding, L.L.C., its general partner By: /s/ ERNIE L. DANNER ------------------------------- Name: Ernie L. Danner Title: Executive Vice President 7 9 EXHIBIT A AREAS RELATING TO THE PROVISION OF PARTIAL SERVICES I. Corporate: 1. Insurance and Risk Management 2. Payroll Services 3. Accounts Payable 4. Accounts Receivable 5. Credit 6. Information Technology - Hardware 7. Management Information Systems - Software 8. Marketing and Sales Information (including information on Weatherford's Server and website) 9. Fleet Department 10. Corporate Accounting 11. Treasury/Cash Management 12. Taxes (income and non-income based) 13. Welfare Employee Benefits 14. Shared Field Services II. Artificial Lift: 1. Argentina - Accounting Support/Regional Manager 2. Peru - Accounting Support 3. Asia Pacific - Regional Manager 4. Europe - Regional Manager 5. Venezuela - Maintenance Work/Regional Manager 6. Middle East - Regional Manager 7. Australia - Services provided by International Pumps & Compressors, Pty. Ltd. III. Completion & Oilfield Services: 1. Argentina - Accounting Support 2. Australia - Accounting Support 3. Brazil - Accounting Support 4. Thailand - Human Resources/Accounting Support/Regional Manager E-1