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EXHIBIT 10.8
[EXECUTION VERSION]
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SECURITIES PURCHASE AGREEMENT
BETWEEN
SIERRA WELL SERVICE, INC.
(the "Company")
AND
JOINT ENERGY DEVELOPMENT
INVESTMENTS II LIMITED PARTNERSHIP
(the "Purchaser")
DATED AS OF MARCH 31, 1999
SERIES A PREFERRED SHARES
SERIES B CONVERTIBLE PREFERRED SHARES
AND
SERIES C CONVERTIBLE PREFERRED SHARES
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS..............................................................................................1
Section 1.01 Definitions............................................................................1
Section 1.02 Accounting Procedures and Interpretation...............................................7
ARTICLE II
ISSUANCE OF SECURITIES; RIGHTS OF PURCHASER..............................................................7
Section 2.01 Issuance of Securities.................................................................7
Section 2.02 The Closing............................................................................8
Section 2.03 Delivery...............................................................................8
Section 2.04 Tax Matters............................................................................8
Section 2.05 Rights of Purchaser....................................................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................................8
Section 3.01 Corporate Existence....................................................................9
Section 3.02 Corporate Power and Authorization......................................................9
Section 3.03 Binding Obligations....................................................................9
Section 3.04 No Legal Bar Or Resultant Lien.........................................................9
Section 3.05 No Consent.............................................................................9
Section 3.06 Financial Condition....................................................................9
Section 3.07 Liabilities............................................................................9
Section 3.08 Litigation............................................................................10
Section 3.09 Taxes; Governmental Charges...........................................................10
Section 3.10 Titles, Etc...........................................................................10
Section 3.11 Defaults..............................................................................10
Section 3.12 Casualties; Taking of Properties......................................................10
Section 3.13 Location of Business and Offices......................................................10
Section 3.14 Compliance with the Law...............................................................10
Section 3.15 No Material Misstatements.............................................................11
Section 3.16 ERISA.................................................................................11
Section 3.17 Environmental Matters.................................................................11
Section 3.18 Capitalization........................................................................12
Section 3.19 Subsidiaries; Partnerships............................................................13
Section 3.20 Conversion Shares.....................................................................13
Section 3.21 Certain Fees..........................................................................13
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.........................................................13
Section 4.01 Investment............................................................................13
Section 4.02 Nature of Purchaser...................................................................14
Section 4.03 Receipt of Information; Authorization.................................................14
Section 4.04 No Consent............................................................................14
ARTICLE V
COVENANTS PENDING CLOSING...............................................................................14
Section 5.01 Antitrust Notification................................................................14
Section 5.02 Mergers...............................................................................15
Section 5.03 Dividends.............................................................................15
Section 5.04 Nature of Business....................................................................15
Section 5.05 Amendment of Certificate of Incorporation or Bylaws...................................15
Section 5.06 Asset Sales...........................................................................15
Section 5.07 Equity Proceeds.......................................................................15
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING.........................................................................16
Section 6.01 Conditions Precedent to Obligations of the Purchasers.................................16
Section 6.02 Conditions Precedent to Obligations of the Company....................................17
ARTICLE VII
COVENANTS...............................................................................................18
Section 7.01 Financial Statements and Reports......................................................18
Section 7.02 Compliance with Laws..................................................................19
Section 7.03 Further Assurances....................................................................19
Section 7.04 Accounts and Records..................................................................19
Section 7.05 Right of Inspection...................................................................19
Section 7.06 Transactions with Affiliates..........................................................19
Section 7.07 Public Disclosures....................................................................19
ARTICLE VIII
MISCELLANEOUS...........................................................................................20
Section 8.01 Interpretation and Survival of Provisions.............................................20
Section 8.02 Costs, Expenses and Taxes.............................................................20
Section 8.03 No Waiver; Modifications in Writing...................................................20
Section 8.04 Binding Effect; Assignment............................................................21
Section 8.05 Replacement Securities................................................................21
Section 8.06 Communications........................................................................21
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Section 8.07 Governing Law.........................................................................22
Section 8.08 Arbitration...........................................................................22
Section 8.09 Execution in Counterparts.............................................................23
Exhibits:
Exhibit 1.01(a) - Certificate of Designations of Series A Preferred Stock
Exhibit 1.01(b) - Certificate of Designations of Series B Preferred Stock
Exhibit 1.01(c) - Certificate of Designations of Series B Preferred Stock
Exhibit 7.01(c) - Budget Requirements
Schedules:
Schedule 3.07 - Liabilities
Schedule 3.08 - Litigation
Schedule 3.17 - Environmental
Schedule 3.18 - Capitalization
Schedule 3.19 - Subsidiaries; Partnerships
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of March 31, 1999 (this
"Agreement"), between SIERRA WELL SERVICE, INC., a Delaware corporation (the
"Company"), and JOINT ENERGY DEVELOPMENT INVESTMENTS II LIMITED PARTNERSHIP, a
Delaware limited partnership (the "Purchaser").
In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"AAA" has the meaning provided therefor in Section 8.08 (b) of this
Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Auction Package" means the auction of various vehicles and
miscellaneous obsolete equipment on or before May 31, 1999.
"Basic Documents" means, collectively, this Agreement and the Equity
Documents.
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of the Board of
Directors.
"Business Day" means any day other than Saturday, Sunday, or a day on
which banking institutions in New York City are not required to be open for
business.
"Capitalized Lease Obligation" means the amount of the liability under
any capital lease that, in accordance with GAAP, is required to be capitalized
and reflected as a liability on the balance sheet.
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"Capital Stock" of any Person means any and all shares, interests,
participations, or other equivalents (however designated) of, or rights,
warrants, or options to purchase, corporate stock or any other equity interest
(however designated) of or in such Person.
"Closing" has the meaning provided therefor in Section 2.02 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations thereunder.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the common stock, no par value per share, of the
Company or such other Capital Stock or other securities as shall, after the
date of this Agreement, constitute the common equity of the Company.
"Conversion Shares" means the shares of Common Stock, Capital Stock
and other securities, property or cash receivable upon conversion of the
Preferred Shares.
"Dispute" shall have the meaning set forth in Section 8.08 (a) of this
Agreement.
"EBITDA" means, with respect to any Person and for any period of its
determination, the consolidated net income of such Person for such period, plus
the consolidated interest expense, income taxes and depreciation and
amortization of such Person for such period, in each case excluding (a)
unrealized gains or losses with respect to such Person's investment portfolio,
(b) any extraordinary gains or losses, and (c) any gains or losses on the sale
of fixed assets.
"Effective Date" shall mean the date of this Agreement.
"Environmental Laws" means any and all laws, statutes, ordinances,
rules, regulations, orders, or determinations of any Governmental Authority
pertaining to health or the environment in effect in any and all jurisdictions
in which the Company is conducting or at any time has conducted business, or
where any property of the Company is located, or where any hazardous substances
generated by or disposed of by the Company is located, including but not
limited to the Oil Pollution Act of 1990 ("OPA"), as amended, the Clean Air
Act, as amended, the Comprehensive Environmental, Response, Compensation, and
Liability Act of 1980 ("CERCLA"), as amended, the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976 ("RCRA"), as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, and other environmental conservation or protection laws. The term
"oil" has the meaning specified in OPA; the terms "hazardous substance,"
"release" and "threatened release" have the meanings specified in CERCLA, and
the terms "solid waste," "disposal" and "disposed" have the meanings specified
in RCRA; provided, however, if either CERCLA, RCRA or OPA is amended so as to
broaden the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective date of such amendment, and provided,
further, that, to the extent the laws of the state in which any property of
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the Company is located establish a meaning for "oil," "hazardous substance,"
"release," "solid waste" or "disposal" which is broader than that specified in
either OPA, CERCLA or RCRA, such broader meaning shall apply with respect to
such property.
"Equity Documents" means the Certificates of Designation relating to
the Preferred Shares, the Registration Rights Agreement and the Stockholders'
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and the rules and regulations thereunder.
"Estimated Private Market Equity Value" means at any time the
difference between (a) the sum of (i) the combined Net Working Capital of the
Company, and (ii) the EBITDA of the Company, for the preceding four fiscal
quarters most recently ended multiplied by 6.0, and (b) the outstanding
Indebtedness of the Company.
"Financial Statements" means consolidated balance sheets, statements
of operations, and statements of cash flow, the consolidating schedules used to
prepare the same, and, on an annual basis, appropriate footnotes prepared in
accordance with GAAP.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Governmental Authority" means any (domestic or foreign) federal,
native American Indian, state, province, county, city, municipal, or other
political subdivision or government, department, commission, board, bureau,
court, agency, or any other instrumentality of any of them, which exercises
jurisdiction over the Company, or any of its property.
"Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person guaranteed directly or indirectly in any
manner by such Person, or in effect guaranteed directly or indirectly by such
Person through an agreement (i) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such Indebtedness, (ii)
to purchase, sell or lease (as lessee or lessor) property, or to purchase or
sell services, primarily for the purpose of enabling the debtor to make payment
of such Indebtedness or to assure the holder of such Indebtedness against loss,
(iii) to supply funds to, or in any other manner invest in, the debtor
(including any agreement to pay for property or services to be acquired by such
debtor irrespective of whether such property is received or such services are
rendered), (iv) to maintain working capital or equity capital of the debtor, or
otherwise to maintain the net worth, solvency or other financial condition of
the debtor, or (v) otherwise to assure a creditor against loss; provided that
the term "guarantee" shall not include endorsements for collection or deposit,
in either case in the ordinary course of business, or any obligation or
liability of such Person in respect of leasehold interests assigned by such
Person to any other Person.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indebtedness" means, with respect to any Person, without duplication,
(i) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services,
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excluding any trade accounts payable and other accrued current liabilities
incurred in the ordinary course of business other than payables or liabilities
60 days past due, (ii) all obligations of such Person evidenced by bonds,
notes, debentures, or other similar instruments, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (iv) all Capitalized Lease
Obligations of such Person, (v) all indebtedness referred to in (but not
excluded from) clause (i), (ii), (iii), or (iv) above of other Persons, the
payment of which is secured by (or for which the holder of such indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien upon
or in property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become liable
for the payment of such indebtedness, (vi) all Guaranteed Debt of such Person,
(vii) all Redeemable Capital Stock that has any redemptions, dividend payments,
or other obligations that are issued by such Person valued at the maximum
redemption price plus all accrued and unpaid dividends thereon plus the maximum
value of any other obligations thereunder and (viii) any amendment, supplement,
modification, deferral, renewal, extension or refunding of any liability of the
types referred to in clauses (i) through (vii) above. For purposes hereof, the
"maximum redemption price" of any Redeemable Capital Stock that does not have a
fixed redemption price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
this Agreement, and if such price is based upon, or measured by, the fair
market value of such Redeemable Capital Stock, such fair market value to be
determined in good faith by the Board of Directors of the issuer of such
Redeemable Capital Stock based on the Estimated Private Market Equity Value.
"Investment Unit" has the meaning provided therefor in Section 2.04 of
this Agreement.
"JEDI I" means Joint Energy Development Investments Limited
Partnership, a Delaware limited partnership.
"JEDI II" means Joint Energy Development Investments II Limited
Partnership, a Delaware limited partnership.
"Lien" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, conditional sale or title retention arrangement or other interest
in property designed to secure repayment of a liability whether arising by
agreement or under law, or otherwise means any mortgage, charge, pledge, lien,
security interest, or encumbrance of any kind.
"Loan Agreements" means, collectively, the Senior Loan Agreement and
the Subordinated Loan Agreement each between the Company and Purchaser dated
March 31, 1999, relating to the Notes.
"Material Adverse Effect" means any circumstances or events which
could (i) have a material adverse effect on the assets or properties,
liabilities, financial condition, business, operations, affairs, or
circumstances of the Company from the facts represented or warranted in any
Basic Document
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(other than any representation or warranty related solely to a different point
in time), or (ii) materially impair the ability of the Company to carry out its
business as it exists on the date of this Agreement or proposed at the date of
this Agreement to be conducted or to meet its obligations under the Basic
Documents on a timely basis.
"Net Working Capital" means, for any Person or group of Persons and as
of any date of its determination, the remainder (shown on the balance sheets of
such Person or group as of the end of the most recent fiscal quarter of such
Person or group for which internal financial statements are available) of (i)
all current assets of such Person or group and (ii) all current liabilities of
such Person or group, except the current portion of long-term Indebtedness.
"Notes" shall mean (i) the $24,408,000 Senior Credit Facility and (ii)
the $25,000,000 Senior Subordinated Credit Facility, each dated as of March 31,
1999, made by the Company and payable to the order of the Purchaser that are
issued pursuant to the Loan Agreements.
"Partnerships" means partnerships with the Company as general partner.
"Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, or government or any agency or
political subdivision thereof.
"Plan" means any plan subject to Title IV of ERISA and maintained by
the Company or any such plan to which the Company is required to contribute on
behalf of their employees.
"Preferred Shares" means collectively, the Series A Shares, the Series
B Shares and the Series C Shares.
"Price" means the average of the "high" and "low" prices as reported
in The Wall Street Journal's listing for such day (corrected for obvious
typographical errors) or if such shares are not reported in such listing, the
average of the reported "high" and "low" sales prices on the largest national
securities exchange (based on the aggregate dollar value of securities listed)
on which such shares are listed or traded, or if such shares are not listed or
traded on any national securities exchange, then the average of the reported
"high" and "low" sales prices for such shares in the over- the-counter market,
as reported on the National Association of Securities Dealers Automated
Quotations System, or, if such prices shall not be reported thereon, the
average of the closing bid and asked prices so reported, or, if such prices
shall not be reported, then the average of the closing bid and asked prices
reported by the National Quotations Bureau Incorporated, or, in all other
cases, the Estimated Private Market Equity Value divided by the number of
outstanding shares (on a fully diluted basis using the treasury stock method).
The "average" Price per share for any period shall be determined by dividing
the sum of the Prices determined for the individual trading days in such period
by the number of trading days in such period.
"Redeemable Capital Stock" of any Person means any Capital Stock of
such Person that, either by its terms, by the terms of any Capital Stock or
other security into which it is convertible or exchangeable or otherwise, (i),
is, or upon the happening of an event or passage of time would be,
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required to be redeemed, or (ii) is redeemable at the option of the holder
thereof, or (iii) is convertible into or exchangeable for debt securities.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of March 31, 1999, made by the Company in favor of the
Purchaser relating to the Preferred Shares.
"Securities" means the Preferred Shares and the Conversion Shares.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations of the Commission promulgated
thereunder.
"Series A Shares" means the 1,000 shares authorized and 500 shares
issued of the Company's Series A Cumulative Preferred Stock, $10,000 par value
per share, to the Purchaser on the date hereof pursuant to this Agreement and
having the preferences, limitations and relative rights as set forth in the
Company's Certificate of Designations of the Series A Preferred Stock attached
hereto as Exhibit 1.01(a).
"Series B Shares" means the 1,000 shares of the Company's Series B
Convertible Preferred Stock, $1 par value per share, issued to the Purchaser on
the date hereof pursuant to this Agreement and having the preferences,
limitations and relative rights as set forth in the Company's Certificate of
Designations of the Series B Convertible Preferred Stock attached hereto as
Exhibit 1.01(b).
"Series C Shares" means the 1 share of the Company's Series C
Convertible Preferred Stock, $1,000 par value per share, issued to the
Purchaser on the date hereof pursuant to the Agreement and having the
preferences, limitations and relative rights as set forth in the Company's
Certificate of Designations of the Series C Convertible Preferred Stock
attached hereto as Exhibit 1.01(c).
"Stockholders' Agreement" means the Stockholders' Agreement dated as
of March 31, 1999, entered into by and among the Purchaser, the Company and
each of the Company's other equity investors.
"Structuring Fee Agreement-Equity" means the agreement between the
Company and ECT Securities Limited Partnership dated of even date herewith and
relating to the fee payable to ECT Securities Limited Partnership for
structuring the transactions set forth in the Equity Documents.
"Subsidiary" of any specified Person means any other Person of which
at the time of determination such specified Person, directly and/or indirectly
through one or more other Persons, owns more than 50% of the voting interests.
"Time of Purchase" has the meaning provided therefor in Section 2.02
of this Agreement.
"Warrants" collectively means all warrants issued to JEDI II pursuant
to the terms of the Securities Purchase Agreement dated September 30, 1997
between JEDI I and the Company, and any warrants issued upon the transfer
thereof or in substitution therefor.
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Section 1.02 Accounting Procedures and Interpretation.
(a) The Company shall not materially change any method of
accounting employed in the preparation of its financial statements from the
methods employed in the preparation of its audited consolidated Financial
Statements dated as of December 31, 1998, unless required to conform to GAAP or
approved in writing by the Purchaser.
(b) Except as expressly provided for in this Agreement, all
accounting terms, definitions, ratios, and other tests described herein shall
be construed in accordance with GAAP with the same basis applied in the
Financial Statements described in paragraph (a) above.
(c) When the financial statements or financial results of any
group of Persons are described as "combined," that reference is to the
financial statements or financial results of such Persons taken together on a
combined basis after eliminating significant interentity balances and
transactions.
(d) Whenever any Basic Document refers to a determination of
the number of outstanding shares using the "treasury stock method," such
determination shall be based upon (1) the number of common shares outstanding,
(2) plus the assumed conversion of all convertible securities into common
stock, (3) plus the net additional shares outstanding assuming the exercise of
all warrants and options. The net additional shares outstanding assuming the
exercise of all warrants and options shall be the total new shares resulting
from such exercise of the warrants and options, reduced by the number of shares
that could be repurchased by the Company with the proceeds from the exercise
thereof at a share price that is equal to a current market value. The current
market value shall be (a) the Price or (b) if the Common Stock is not listed
for trading on a national securities exchange or quoted by NASDAQ, the price
per share as determined using the Estimated Private Market Equity Value.
ARTICLE II
ISSUANCE OF SECURITIES; RIGHTS OF PURCHASER
Section 2.01 Issuance of Securities. The Company agrees that it will
issue the Preferred Shares to the Purchaser at the Time of Purchase, but
effective as of the Effective Date, in accordance with the terms and conditions
set forth herein for good and valuable consideration, receipt and sufficiency
which is hereby accepted. Such issuance shall be made in consideration of the
forgiveness of $5,002,000 of Indebtedness owed to JEDI II under the Original
Loan Agreement as such term is defined in the Loan Agreements.
Section 2.02 The Closing. The purchase and sale of Securities will
take place at a closing (the "Closing") to be held at the offices of Xxxxxxxxx
& Xxxxxxxxx, L.L.P., 000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 at 10:00
a.m. (Houston, Texas time) on the fifth business day following the satisfaction
or waiver of all conditions set forth herein to the obligations of the parties
to consummate the transactions contemplated hereby (other than conditions to be
satisfied at or
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concurrently with the Closing), or on such other date on or before the date
specified in Section 6.01(a) to which the Company and the Purchaser shall
agree. The date and time at which the Closing is to be concluded is the "Time
of Purchase."
Section 2.03 Delivery. Delivery of the Securities pursuant to this
Agreement shall be made at the Closing by the Company delivering to the
Purchaser (i) one certificate representing the Series A Preferred Shares, (ii)
one certificate representing the Series B Preferred Shares, and (iii) one
certificate representing the Series C Preferred Shares, each registered in the
name of the Purchaser (or such other Person as the Purchaser may have
designated in writing to the Company at least three Business Days prior to the
Time of Purchase). Against such delivery, at Closing, the Purchaser shall
deliver to the Company the Warrants marked "canceled" and by such markings the
Purchaser shall agree that such Warrants are canceled..
Section 2.04 Tax Matters. The Company and the Purchaser agree as
follows: (i) Purchaser's acquisition of the Notes and Preferred Shares
constitutes the purchase of an "investment unit" (the "Investment Unit") for
purposes of Treas. Reg.Section 1.1273-2(h)(1); (ii) the issue price of the
Investment Unit is $54,410,000.00 as determined in accordance with Treas. Reg.
Section 1.1273-2(a)(1); (iii) the issue price for the Investment Unit shall be
allocated among the Notes and the Preferred Shares in accordance with their
relative fair market values, as required by Treas. Reg.Section 1.1273-2(h)(1);
and (iv) the parties shall mutually agree to an allocation of the issue price
among the Notes and the Preferred Shares prior to the Closing and shall be bound
by such allocation for all tax-related purposes.
Section 2.05 Rights of Purchaser. The Purchaser shall have such rights
with respect to the registration of the Preferred Shares or the Conversion
Shares under the Securities Act and state securities laws as are set forth in
the Registration Rights Agreement, which shall be executed by the Company and
the Purchaser at the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser, for the benefit of the
Preferred Shares, which representations and warranties shall survive the
execution of any document or agreement, that as of the Effective Date and as of
the Closing Date:
Section 3.01 Corporate Existence. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it was incorporated and is duly qualified as a foreign
corporation in all jurisdictions where qualification is necessary.
Section 3.02 Corporate Power and Authorization. The Company is duly
authorized and empowered to execute, deliver, and perform the Basic Documents;
and all corporate and other action on the Company requisite for the due
execution, delivery, and performance of the Basic Documents has been duly and
effectively taken.
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Section 3.03 Binding Obligations. The Basic Documents constitute valid
and binding obligations of the Company enforceable in accordance with their
respective terms (except that enforcement may be subject to any applicable
bankruptcy, insolvency, or similar debtor relief laws now or hereafter in
effect and relating to or affecting the enforcement of creditors rights
generally).
Section 3.04 No Legal Bar Or Resultant Lien. The Basic Documents do
not and will not, to the best of Company's knowledge, violate any provisions of
any contract, agreement, law, regulation, order, injunction, judgment, decree,
or writ to which the Company is subject, or result in the creation or
imposition of any lien or other encumbrance upon any assets or properties of
the Company.
Section 3.05 No Consent. Except for the filings required by the HSR
Act, the execution, delivery, and performance by the Company of the Basic
Documents does not require the consent or approval of any other Person or
entity, including without limitation any Governmental Authority.
Section 3.06 Financial Condition. The audited consolidated Financial
Statements of the Company dated December 31, 1998, which have been delivered to
Purchaser are complete and correct in all material respects, and fully and
accurately reflect in all material respects the financial condition and results
of the operations of the Company as of the date or dates and for the period or
periods stated, and such Financial Statements have been prepared in accordance
with GAAP. The unaudited consolidated Financial Statements of the Company dated
January 31, 1999, which have been delivered to Purchaser are complete and
correct in all material respects, and fully and accurately reflect in all
material respects the financial condition and results of the operations of the
Company as of the date or dates and for the period or periods stated, and such
Financial Statements have been prepared in accordance with GAAP. Since the date
of the January 31, 1999 Financial Statements, no change has since occurred in
the condition, financial or otherwise, of the Company which could have a
Material Adverse Effect.
Section 3.07 Liabilities. The Company does not have any material
(individually or in the aggregate) liability, direct or contingent, except as
disclosed to the Purchaser in the Financial Statements described in Section
3.06 and on Schedule 3.07 attached hereto. No unusual or unduly burdensome
restrictions, restraint, or hazard exists by contract, law or governmental
regulation, or otherwise relative to the business, assets, or properties of the
Company.
Section 3.08 Litigation. Except as described in the consolidated
Financial Statements of the Company described in Section 3.06, or as otherwise
disclosed to the Purchaser in Schedule 3.08 attached hereto, there is no
litigation, legal or administrative proceeding, investigation, or other action
of any nature pending or, to the knowledge of the officers of the Company,
threatened against or affecting the Company which involves the possibility of
any judgment or liability not fully covered by insurance.
Section 3.09 Taxes; Governmental Charges. The Company has filed all
tax returns and reports required to be filed and has paid all taxes,
assessments, fees, and other governmental charges levied upon it or its assets,
properties, or income which are due and payable, including interest and
penalties or has provided adequate reserves, if required, in accordance with
GAAP for the payment
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thereof, except such as are being contested in good faith by appropriate
proceedings and for which adequate reserves for the payment thereof as required
by GAAP has been provided and levy and execution thereon have been stayed and
continue to be stayed.
Section 3.10 Titles, Etc. The Company has good and defensible title to
all of its assets reflected as being owned by the Company in the Financial
Statements of the Company described in Section 3.06, free and clear of all
liens or other encumbrances except Permitted Liens.
Section 3.11 Defaults. The Company is not in default and no event or
circumstance has occurred which, but for the passage of time or the giving of
notice, or both, would constitute a default under any loan or credit agreement,
indenture, mortgage, deed of trust, security agreement, or other material
agreement or instrument to which the Company is a party.
Section 3.12 Casualties; Taking of Properties. Since the date of the
Financial Statements described in Section 3.06, neither the business nor the
assets or properties of the Company have been affected, as a result of any
fire, explosion, earthquake, flood, drought, windstorm, accident, strike, or
other labor disturbance, embargo, requisition, or taking of property or
cancellation of contracts, permits, or concessions by any governmental
authority thereof, riot, activities of armed forces, or acts of God or of any
public enemy.
Section 3.13 Location of Business and Offices. The principal place of
business of the Company is located at 000 X. Xxx Xxxxxx, Xxxxxxx, Xxxxx
00000-0000.
Section 3.14 Compliance with the Law.
(a) The Company is not in violation of any law, judgment,
decree, order, ordinance, or governmental rule or regulation to which
the Company, or any of its assets or properties are subject;
(b) the Company has not failed to obtain any license, permit,
franchise or other governmental authorization necessary to the
ownership of any of its assets or properties or the conduct of its
business;
which violation or failure is reasonably expected to have a Material Adverse
Effect.
Section 3.15 No Material Misstatements.
(a) There are no facts or conditions relating to the Basic
Documents or the financial condition, assets, or business prospects of the
Company that could, collectively or individually, have a Material Adverse
Effect.
(b) The Financial Statements and other related financial data
(excluding all projections and pro forma financial data) and reserve reports
furnished to the Purchaser by or at the direction of the Company in connection
with the negotiation of this Agreement do not contain any material misstatement
of fact and, when considered with all other written statements furnished to the
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Purchaser in that connection, such Financial Statements, related financial data
(excluding all projections and pro forma financial data) and reserve reports do
not omit to state a material fact or any fact necessary to make the statement
contained therein not misleading.
Section 3.16 ERISA. The Company is in compliance in all material
respects with the applicable provisions of ERISA, and no "reportable event", as
such term is defined in Section 4043 of ERISA, has occurred with respect to any
Plan of the Company.
Section 3.17 Environmental Matters. Except as disclosed on Schedule
3.17:
(a) Environmental Laws, etc. No property of the Company nor
the operations conducted thereon violates any applicable order of any
Governmental Authority or Environmental Laws which could reasonably be
expected to result in remedial obligations assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions,
and circumstances, if any, pertaining to the relevant property.
(b) No Litigation. Without limitation of paragraph (a) above,
no property of the Company nor the operations currently conducted
thereon or by any prior owner or operator of such property or
operation, is in violation of or subject to any existing, pending, or
threatened action, suit, investigation, inquiry, or proceeding by or
before any Governmental Authority or to any remedial obligations under
Environmental Laws, which violation, action, suit, investigation,
inquiry, or proceeding could reasonably be expected to have a Material
Averse Effect or which could reasonably be expected to result in
remedial obligations having a Material Adverse Effect assuming
disclosure to the applicable Governmental Authority of all relevant
facts, conditions, and circumstances, if any, pertaining to the
relevant property.
(c) Notices, Permits, etc. All notices, permits, licenses, or
similar authorizations, if any, required to be obtained or filed by
the Company in connection with the operation or use of any and all
property of the Company, including but not limited to past or present
treatment, storage, disposal, or release of a hazardous substance or
solid waste into the environment, have been duly obtained or filed
where the failure to do so could reasonably be expected to result in
remedial obligations assuming disclosure to the applicable
Governmental Authority of all relevant facts, conditions, and
circumstances, if any, pertaining to the relevant property.
(d) Hazardous Substances Carriers. All hazardous substances
or solid waste generated at any and all property of the Company have
in the past been transported, treated, and disposed of only by
carriers maintaining valid permits under any Environmental Law, and
only at treatment, storage, and disposal facilities maintaining valid
permits under any Environmental Law, which carriers and facilities
have been and are operating in compliance with such permits, where the
failure to maintain and comply with such permits could reasonably be
expected to result in remedial obligations having a Material Adverse
Effect assuming disclosure to the applicable Governmental Authority of
all relevant facts, conditions, and circumstances, if any, pertaining
to the relevant property.
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(e) Hazardous Substances Disposal. The Company has taken all
reasonable steps necessary to determine and have determined that no
hazardous substances or solid waste have been disposed of or otherwise
released and there has been no threatened release of any hazardous
substances on or to any property of the Company, except in compliance
with Environmental Laws, which could reasonably be expected to result
in remedial obligations assuming disclosure to the applicable
Governmental Authority of all relevant facts, conditions, and
circumstances, if any, pertaining to the relevant property.
(f) OPA Requirements. To the extent applicable, the Company
has complied with all design, operation, and equipment requirements
imposed by OPA or scheduled to be imposed by OPA, and the Company does
not have reason to believe that it will not be able to maintain such
compliance with OPA requirements.
(g) No Contingent Liability. The Company does not have any
material contingent liabilities in connection with any release or
threatened release of any hazardous substance or solid waste into the
environment other than such contingent liabilities at any one time and
from time to time which could reasonably be expected to exceed an
aggregate of $500,000 in excess of applicable insurance coverage and
for which adequate reserves for the payment thereof as required by
GAAP have not been provided, or which could reasonably be expected to
result in remedial obligations assuming disclosure to the applicable
Governmental Authority of all relevant facts, conditions, and
circumstances, if any, pertaining to such release or threatened
release.
Section 3.18 Capitalization. The authorized Capital Stock of the
Company consists of: 500,000 shares of Common Stock, no par value per share and
2,500 shares of preferred stock, par value $10,000 per share. As of the close
of business on March 31, 1999 and upon the Closing Date, there were issued and
outstanding 4370.71 shares of Common Stock and no other shares of Capital
Stock. Upon the Closing Date, the only shares of Preferred Stock issued and
outstanding are the Preferred Shares issued pursuant hereto. All outstanding
shares of the Company's Capital Stock are validly issued, fully paid and
nonassessable and, except as set forth on Schedule 3.18(a), are not subject to
any preemptive rights. Other than as set forth on Schedule 3.18(b) the Company
is not a party to any voting trust or other agreement or understanding with
respect to the voting of its Capital Stock. Other than the Preferred Shares,
there are no (i) outstanding securities convertible or exchangeable into
Capital Stock of the Company or (ii) contracts, commitments, agreements,
understandings, or arrangements of any kind to which the Company is a party
relating to the issuance of any Capital Stock of the Company. The Company is
not a party to or bound by any agreement with respect to any of its securities
which grants registration rights to any person, except as set forth on Schedule
3.18(c).
Section 3.19 Subsidiaries; Partnerships. There are no Subsidiaries of
the Company. The Company is not a partner in a Partnership, limited liability
company, joint venture, association or other business entity, except as set
forth on Schedule 3.19.
Section 3.20 Conversion Shares. When issued and delivered in
accordance with the terms of the Preferred Shares, any and all of the
Conversion Shares issuable upon conversion of the
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Preferred Shares will be duly and validly issued, fully paid, nonassessable,
and, other than as set forth in the Basic Documents, free of preemptive rights
and free from all taxes payable by the Company and Liens (except any Liens
created or suffered to be created by the Purchaser) and will not be subject to
any restriction on the voting or transfer thereof created by the Company.
Section 3.21 Certain Fees. Except for the structuring fee payable to
ECT Securities Limited Partnership pursuant to the Structuring Fee
Agreement-Equity, no fees or commissions will be payable by the Company to
brokers, finders, investment bankers, or Purchaser with respect to the issuance
and sale of any of the Securities or the consummation of the transaction
contemplated by this Agreement. The Company agrees that it will indemnify and
hold harmless the Purchaser from and against any and all claims, demands, or
liabilities for broker's, finders or placement fees, or other similar fees or
commissions incurred by the Company or alleged to have been incurred by the
Company in connection with the issuance or sale of the Securities or the
consummation of the transaction contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company, which representations and
warranties shall survive the execution of any document or agreement, that as of
the Effective Date and the Closing Date:
Section 4.01 Investment. The Purchaser represents and warrants to, and
covenants and agrees with, the Company that the Securities are being acquired
for its own account and with no intention of distributing or reselling the
Securities in any transaction which would be in violation of the securities
laws of the United States of America or any State, without prejudice, however,
to Purchaser's right at all times to sell or otherwise dispose of all or any
part of the Securities under a registration statement under the Securities Act
and applicable state securities laws or under an exemption from such
registration available thereunder (including, without limitation, if available,
Rule 144A promulgated thereunder). If the Purchaser should in the future decide
to dispose of any of the Preferred Shares or the Conversion Shares, the
Purchaser understands and agrees (i) that it may do so only (A) in compliance
with the Securities Act and applicable state securities law, as then in effect,
and (B) in the manner contemplated by any registration statement pursuant to
which such securities are being offered, and (ii) that stop-transfer
instructions to that effect will be in effect with respect to such Securities.
The Purchaser agrees to the imprinting, so long as appropriate, of a legend on
each certificate representing Securities, to the effect as set forth above.
Section 4.02 Nature of Purchaser. The Purchaser represents and
warrants to, and covenants and agrees with, the Company that, (i) it is an
"accredited investor" within the meaning of paragraphs (a)(3) or (8) of Rule
501 under the Securities Act and (ii) by reason of its business and financial
experience it has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Securities, is able to bear the economic risk of
such investment and, at the present time, would be able to afford a complete
loss of such investment.
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Section 4.03 Receipt of Information; Authorization. The Purchaser
acknowledges that it has had an opportunity to ask questions of and receive
satisfactory answers from designated representatives of the Company concerning
the terms and conditions pursuant to which the purchase of the Securities are
made. The Purchaser acknowledges that it has been afforded an opportunity to
examine such documents and other information which it has requested for the
purpose of verifying the information provided to it and for the purpose of
answering any questions it may have concerning the business affairs and
financial condition of the Company. The Purchaser represents that it alone or
with its advisors has knowledge and experience in the business of the Company
so as to be capable of evaluating the merits and risks of an investment in the
Company based upon the information furnished to it, its knowledge of the
business and affairs of the Company, the records, files, and plans of the
Company (which have been made available to it), such additional information as
it has requested and has received from the Company, and the independent
inquiries and investigations undertaken by it. The Purchaser represents and
warrants that the purchase of the Securities by it has been duly and properly
authorized and this Agreement has been duly executed and delivered by it or on
its behalf.
Section 4.04 No Consent. Except for the filings required by the HSR
Act, the execution, delivery, and performance by the Purchaser of the Basic
Documents does not require the consent or approval of any other Person or
entity, including without limitation any Governmental Authority.
ARTICLE V
COVENANTS PENDING CLOSING
Section 5.01 Antitrust Notification. Each of the Company and Purchaser
will as promptly as practicable, and in any event within 15 days after the
Effective Date, make all filings or submissions as are required under the HSR
Act. Each of the Company and Purchaser will as promptly as practicable furnish
to the other such necessary information and reasonable assistance as the other
may request in connection with its preparation of any filing or submission
which is necessary under the HSR Act. Without limiting the generality of the
foregoing, each of the Company and Purchaser will as promptly as practicable
notify the other of the receipt and content of any inquiries or requests for
additional information made by any Governmental Authority in connection
therewith and will as promptly as practicable (i) take all reasonable actions
necessary to comply with any such inquiry or request and (ii) provide the other
with a description of the information provided to any Governmental Authority
with respect to any such inquiry or request. In addition, each of the Company
and Purchaser will keep the other apprised of the status of any such inquiry or
request and take such reasonable actions as are necessary to obtain any
clearance required under the HSR Act for the consummation of the transactions
contemplated hereby.
Section 5.02 Mergers. Beginning on the Effective Date and until the
Time of Purchase, the Company shall not, and shall not permit any of its
Subsidiaries to, consolidate or merge with or into any other Person, to
liquidate, dissolve or incur a name change, including a change of trade name.
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Section 5.03 Dividends. Beginning on the Effective Date and until the
Time of Purchase, the Company shall not declare or pay any cash dividend,
purchase, redeem or otherwise acquire for value any of its Capital Stock now or
hereafter outstanding, return any capital to stockholders, or make any
distribution of its assets to its stockholders as such.
Section 5.04 Nature of Business. Beginning on the Effective Date and
until the Time of Purchase, the Company shall not, and shall not permit any
Subsidiary to, allow any material change to be made in the character of their
business as carried on at the date hereof.
Section 5.05 Amendment of Certificate of Incorporation or Bylaws.
Beginning on the Effective Date and until the Time of Purchase, the Company
shall not, and shall not permit any Subsidiary to, allow any amendment to, or
other alteration of, their Certificate of Incorporation, Bylaws or any
contract, agreement or instrument that could have a detrimental affect on the
Company.
Section 5.06 Asset Sales. Beginning on the Effective Date and until
the Time of Purchase, the Company shall not and shall not permit any Subsidiary
to, sell, transfer or otherwise convey any interest of the Company or the
Subsidiary in any of their respective assets without the prior written consent
of the Purchaser if the aggregate amount of the consideration received from all
such sales, transfers, and conveyances during any fiscal year of the Company
would exceed $100,000; provided, however, that the Company may (i) sell the
Lampassas Ranch and (ii) complete the sale of the Auction Package. No sale,
transfer or conveyance shall be for less than the fair market value of the
asset.
Section 5.07 Equity Proceeds. Beginning on the Effective Date and
until the Time of Purchase, the Company shall not, and shall not permit any
Subsidiary to, issue any additional Capital Stock or debt securities following
the Effective Date, without the prior written consent of the Purchaser.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
Section 6.01 Conditions Precedent to Obligations of the Purchasers.
The obligation of Purchaser to acquire the Securities is subject, at the Time
of Purchase, to the prior or simultaneous satisfaction or waiver of the
following conditions:
(a) The Time of Purchase shall not be later than 5:00 P.M.,
Houston, Texas time, on May 15, 1999, subject to extension if the
Purchaser agrees to extend the Time of Purchase upon request to do so
by the Company.
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(b) The Company shall have duly amended its Certificate of
Incorporation to provide for a number of authorized shares of
preferred stock sufficient to issue the Preferred Shares hereunder.
(c) The Company shall have duly amended its Certificate of
Incorporation and/or Bylaws, in form and substance satisfactory to the
Purchaser, including, without limitation, allowing for a maximum of
seven Persons on the Company's Board of Directors.
(d) The representations and warranties made by the Company
herein shall be true and correct (except for changes expressly
provided for by this Agreement) on and as of the Effective Date and
the Time of Purchase with the same effect as though such
representations and warranties had been made on and as of the Time of
Purchase, the Company shall have performed and complied with all
agreements and conditions set forth in or contemplated hereunder or in
the Basic Documents required to be performed or complied with by it at
or prior to the Effective Date and/or the Time of Purchase, and the
Basic Documents shall have been executed and delivered by all the
respective parties thereto and shall be in full force and effect.
(e) The Company's stockholders shall have duly executed a
valid written consent approving the form and content of the Basic
Documents and the performance thereof by the Company and shall have
delivered a copy of such consent to the Purchaser.
(f) The Purchaser shall have received duly executed and
delivered copies of this Agreement, the Loan Agreements and the
Structuring Fee Agreement-Equity, intended for delivery on the
Effective Date including the Equity Documents together with all other
documents reasonably requested by the Purchaser in connection
therewith and all proceedings taken in connection with the issuance of
the Securities and the transactions contemplated by the Basic
Documents shall be reasonably satisfactory to the Purchaser and its
counsel.
(g) The Purchaser shall have received an opinion of counsel
to the Company acceptable to the Purchaser addressing the existence
and good standing of the Company, the authorization of the Basic
Documents, the enforceability of the Basic Documents, the absence of
conflicts with law, other material agreements, and court orders, the
absence of litigation, and such other matters as the Purchaser may
request.
(h) The Purchaser shall have received a certificate, dated
the Time of Purchase, of the Secretary or an Assistant Secretary of
the Company, (i) certifying as true, complete and correct the charter
and by-laws of the Company and resolutions of the Board of Directors
attached thereto, (ii) as to the absence of proceedings or other
action for dissolution, liquidation or reorganization of the Company,
(iii) as to the incumbency of the officers of the Company who shall
have executed instruments, agreements, and other documents in
connection with the transactions contemplated hereby or by the Basic
Documents, and (iv) covering such other matters, and with such other
attachments thereto, as the Purchaser may
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request, and such certificate and the attachments thereto shall be
satisfactory in form and substance to the Purchaser.
(i) The Purchaser shall have completed its due diligence
review of such matters as it shall deem appropriate, and a review of
the Company's properties and operations with respect to compliance
with Environmental Laws, and any available reports related thereto,
and the results of such due diligence review shall be satisfactory to
the Purchaser.
(j) The Company shall have paid to or on behalf of the
Purchaser all amounts payable pursuant to Section 8.02 of this
Agreement and shall have made to ECT Securities Limited Partnership
all payments required under the terms of the Structuring Fee
Agreement-Equity.
(k) The Purchaser shall have received or be satisfied with
the completion of all other items described on the current listing of
closing documents distributed by the Purchaser to the Company in
connection with the execution of this Agreement.
(l) The waiting period under the HSR Act and the rules and
regulations promulgated thereunder applicable to the transactions
contemplated hereunder shall have expired or been terminated.
Section 6.02 Conditions Precedent to Obligations of the Company. The
obligations of the Company to issue and sell Securities hereunder is subject,
at the Time of Purchase, to the prior or simultaneous satisfaction or waiver of
the following conditions:
(a) The representations and warranties made by the Purchaser
herein shall be true and correct on and as of the Effective Date and
the Time of Purchase with the same effect as though such
representations and warranties had been made on and as of the Time of
Purchase.
(b) The issuance of the Securities by the Company shall not
at the Time of Purchase be enjoined (temporarily or permanently) under
the laws of any jurisdiction to which the Company is subject.
(c) The Purchaser shall have delivered such Warrants to the
Company marked "canceled" which such markings shall indicate
Purchaser's agreement that such Warrants are canceled.
(d) The Purchaser shall have accepted delivery of the
Securities.
(e) Each of the Basic Documents shall have been executed and
delivered by all the respective parties thereto and shall be in full
force and effect.
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ARTICLE VII
COVENANTS
The Company covenants to the Purchaser, for the benefit of the Preferred
Shares, that so long as any Preferred Shares are outstanding:
Section 7.01 Financial Statements and Reports. The Company shall
promptly furnish to the Purchaser from time to time upon request such
information regarding the business and affairs and financial condition of the
Company, as the Purchaser may reasonably request, and will furnish to the
Purchaser:
(a) Annual Audited Financial Statements - as soon as
available, and in any event within ninety (90) days after the close of
each fiscal year, the annual audited Financial Statements
(consolidated, if applicable) of the Company, certified, without any
qualification or limit of the scope of the examination of matters
relevant to the financial statements, by KPMG Peat Marwick, L.L.P.,
any nationally recognized public accounting firm or any other
accounting firm approved by the Purchaser.
(b) Quarterly Financial Statements - as soon as available,
and in any event within forty-five (45) days after the end of each
calendar quarter of each year (except the last calendar quarter in any
fiscal year), the quarterly unaudited Financial Statements
(consolidated and consolidating) of the Company.
(c) Annual Budget - as soon as available and in any event on
or before last Business Day of each November, the detailed income
statements and capital budgets for the coming calendar year as of the
date of the budget approved by the Company's Board of Directors for
the Company and its Subsidiaries, such budget being prepared in
accordance with Exhibit 7.01(c).
(d) Additional Information - promptly upon request of the
Purchaser from time to time, any additional financial information or
other information that the Purchaser may reasonably request.
All such information, reports, and Financial Statements referred to in this
Section 7.01 shall be in such detail as the Purchaser may reasonably request
and shall be prepared in a manner consistent with the requirements set forth
above and in Section 1.02.
Section 7.02 Compliance with Laws. The Company shall observe and
comply, in all material respects, with all applicable laws, statutes, codes,
acts, ordinances, orders, judgments, deuces, injunctions, rules, regulations,
orders, and restrictions of applicable Governmental Authorities, including
those relating to Environmental Laws and energy regulations.
Section 7.03 Further Assurances. The Company shall promptly cure any
defects in the creation and issuance of the Equity Documents. The Company shall
promptly execute and deliver to the Purchaser upon its reasonable request all
such other and further documents, agreements, and
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instruments in compliance with or accomplishment of the covenants and
agreements in the Equity Documents.
Section 7.04 Accounts and Records. The Company shall keep books,
records, and accounts in which full, true, and correct entries will be made of
all dealings or transactions in relation to its business and activities,
prepared in a manner consistent with the requirements of Section 1.02.
Section 7.05 Right of Inspection. The Company shall permit any
officer, employee, or agent of the Purchaser to examine their books, records,
and accounts, and take copies and extracts therefrom, all at such reasonable
times and as often as the Purchaser may reasonably request. The Purchaser will
keep all such information confidential and will not without prior written
consent disclose or reveal the information or any part thereof to any person
other than the Purchaser's officers, employees, legal counsel, regulatory
authorities, or advisors to whom it is necessary to reveal such information for
the purpose of effectuating the agreements and undertakings specified herein or
as otherwise required by law or in connection with the enforcement of the
Purchaser' rights and remedies under the Equity Documents.
Section 7.06 Transactions with Affiliates. The Company shall not enter
into any transaction with any of its Affiliates, except transactions upon terms
no less favorable to it than would be obtained in a transaction negotiated at
arm's length with a unrelated third party.
Section 7.07 Public Disclosures. The Company covenants that it will
not disclose the identity of the Purchaser in any public announcement,
governmental filing or otherwise without Purchaser's prior written consent
unless such disclosure is compelled or required by law, stock exchange rule or
by order of a court of competent jurisdiction.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Interpretation and Survival of Provisions. Article,
Section, Schedule, and Exhibit references are to this Agreement, unless
otherwise specified. All references to instruments, documents, contracts, and
agreements are references to such instruments, documents, contracts, and
agreements as the same may be amended, supplemented, and otherwise modified
from time to time, unless otherwise specified. The word "including" shall mean
"including but not limited to." Whenever the Company has an obligation under
the Basic Documents, the expense of complying with that obligation shall be an
expense of the Company unless otherwise specified. Whenever any determination,
consent, or approval is to be made or given by the Purchaser, such action shall
be in the Purchaser's sole discretion unless otherwise specified in this
Agreement. If any provision in the Basic Documents is held to be illegal,
invalid, not binding, or unenforceable, such provision shall be fully severable
and the Basic Documents shall be construed and enforced as if such illegal,
invalid, not binding, or unenforceable provision had never comprised a part of
the Basic Documents, and the remaining provisions shall remain in full force
and effect. The Basic Documents have been reviewed and negotiated by
sophisticated parties with access to legal counsel and shall not be
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construed against the drafter. The representations, warranties, and covenants
made in this Agreement shall remain operative and in full force and effect
regardless of (a) any investigation made by or on behalf of the Company or the
Purchaser or (b) acceptance of any of the Securities and payment therefor and
repayment or repurchase thereof. The provision of Section 8.02 shall remain
operative and in full force and effect unless such Sections are expressly
terminated in a writing referencing those individual Sections, regardless of
any purported general termination of this Agreement.
Section 8.02 Costs, Expenses and Taxes. The Company agrees to pay all
costs and expenses (including reasonable, properly documented fees and expenses
of counsel to the Purchaser) reasonably incurred by the Purchaser in connection
with negotiation, preparation, printing, execution and delivery of the Basic
Documents and the transactions contemplated hereby and thereby. The Company
shall also pay any expenses of the Purchaser reasonably incurred in connection
with any amendment or supplement to or modification of any of the foregoing and
any and all other documents furnished pursuant hereto or thereto or in
connection herewith or therewith. In addition, the Company shall pay any and
all stamp, transfer, and other similar taxes payable or determined to be
payable in connection with the execution and delivery of this Agreement or the
original issuance of the Securities and shall save and hold the Purchaser
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying, or omission to pay, such taxes.
Section 8.03 No Waiver; Modifications in Writing.
(a) No failure or delay on the part of the Company or the
Purchaser in exercising any right, power, or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
power, or remedy preclude any other or further exercise thereof or the exercise
of any right, power, or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
the Purchaser at law or in equity or otherwise.
(b) Except as otherwise provided herein, no amendment,
waiver, consent, modification, or termination of any provision of this
Agreement shall be effective unless signed by the Company and the holder of the
majority of the Preferred Shares. Any amendment, supplement or modification of
or to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure by the Company from the terms of
any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which made or given. Except where
notice is specifically required by this Agreement, no notice to or demand on
the Company in any case shall entitle the Company to any other or further
notice or demand in similar or other circumstances.
Section 8.04 Binding Effect; Assignment. This Agreement shall be
binding upon the Company and the Purchaser, and their respective successors and
permitted assigns. Except as expressly provided in this Agreement, this
Agreement shall not be construed so as to confer any right or benefit upon any
Person other than the parties to this Agreement, and their respective
successors and permitted assigns. Prior to the Time of Purchase, the rights and
obligations of the Purchaser under this Agreement may not be assigned to any
other Person except with the prior consent of the
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Company, which shall not be unreasonably withheld. After the Time of Purchase,
the rights and obligations of the Purchaser under this Agreement with respect
to the Preferred Shares may be assigned by the Purchaser by assignment of the
Preferred Shares, and upon any such assignment, the holder of the Preferred
Shares shall succeed to all of the Purchaser's rights and obligations under
this Agreement with respect to the Preferred Shares and the Purchaser shall be
automatically released from any obligations thereunder with respect to the
Preferred Shares. Upon request of the Purchaser in connection with the transfer
of any Preferred Shares, the Company shall execute and deliver any amendment to
this Agreement, the Preferred Shares, and the other Basic Documents reasonably
requested by the Purchaser to reflect the transfer.
Section 8.05 Replacement Securities. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction, or mutilation of
any certificates representing Preferred Shares or Conversion Shares and, in the
case of any such loss, theft, or destruction, upon delivery of any unsecured
letter of indemnity to the Company or, in the case of any such mutilation, upon
surrender or cancellation thereof, the Company will issue new certificates
representing Preferred Shares, or Conversion Shares, as applicable.
Section 8.06 Communications. All notices and demands provided for
hereunder shall be in writing, and if to the Purchaser, shall be given by
registered or certified mail, return receipt requested, telex, telegram,
telecopy, air courier guaranteeing overnight delivery or personal delivery, to
the Purchaser, to the following address:
Joint Energy Development Investments II Limited Partnership
c/o Enron Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx, Director - 28th Floor
Telecopier: (000) 000-0000
and, if to the Company:
Sierra Well Service, Inc.
000 X. Xxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: X.X. Xxxxxxx III
Telecopier: (000) 000-0000
or to such other address as the Company or Purchaser may designate in writing.
All other communications may be by regular mail. All such notices and
communications and all notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; four days
after being sent by certified mail, return receipt requested, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next Business Day if timely delivered to an air courier guaranteeing overnight
delivery.
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Section 8.07 Governing Law. The laws of the State of New York will
govern this Agreement without regard to principles of conflicts of laws.
Section 8.08 Arbitration.
(a) Binding Arbitration. On the request of either Company or
Purchaser, (whether made before or after the institution of any legal
proceeding), any action, dispute, claim or controversy of any kind now existing
or hereafter arising between any of the parties hereto in any way arising out
of, pertaining to or in connection with this Agreement (a "Dispute") shall be
resolved by binding arbitration in accordance with the terms hereof. Either
Company or Purchaser may, by summary proceedings, bring an action in court to
compel arbitration of any Dispute.
(b) Governing Rules. Any arbitration shall be administered by
the American Arbitration Association (the "AAA") in accordance with the terms
of this Section, the Commercial Arbitration Rules of the AAA, and, to the
maximum extent applicable, the Federal Arbitration Act. Judgment on any award
rendered by an arbitrator may be entered in any court having jurisdiction.
(c) Arbitrators. Arbitration hereunder shall be before a
three-person panel of neutral arbitrators, consisting of one person from each
of the following categories: (1) an attorney who has practiced in the area of
commercial law for at least 10 years or a retired judge at the Texas or United
States District Court or an appellate court level: (2) a person with at least
10 years experience in commercial lending: and (3) a person with at least 10
years experience in the petroleum industry. The AAA shall submit a list of
persons meeting the criteria outlined above for each category of arbitrator,
and the parties shall select one person from each category in the manner
established by the AAA. If the parties cannot agree on an arbitrator within 30
days after the request for an arbitration, then any party may request the AAA
to select an arbitrator. The arbitrators may engage engineers, accountants or
other consultants that the arbitrator deems necessary to render a conclusion in
the arbitration proceeding.
(d) Conduct of Arbitration. To the maximum extent
practicable, an arbitration proceeding hereunder shall be concluded within 180
days of the filing of the Dispute with the AAA. Arbitration proceedings shall
be conducted in Houston, Texas. Arbitrators shall be empowered to impose
sanctions and to take such other actions as the arbitrators deem necessary to
the same extent a judge could impose sanctions or take such other actions
pursuant to the Federal Rules of Civil Procedure and applicable law. At the
conclusion of any arbitration proceeding, the arbitrator shall make specific
written findings of fact and conclusions of law. The arbitrators shall have the
power to award recovery of all costs and fees to the prevailing party. Company
and Purchaser each agrees to keep all Disputes and arbitration proceedings
strictly confidential except for disclosure of information required by
applicable law.
(e) Costs of Arbitration. All fees of the arbitrators and any
engineer, accountant or other consultant engaged by the arbitrators, shall be
paid by Company and Purchaser equally unless otherwise awarded by the
arbitrators.
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Section 8.09 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement.
[SIGNATURE PAGE - SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties hereto execute this Agreement,
effective as of the date first above written.
SIERRA WELL SERVICE, INC.
/s/ Xxxx X. Xxxxxx
---------------------------------------------
Xxxx X. Xxxxxx
Vice Chairman
JOINT ENERGY DEVELOPMENT
INVESTMENTS II LIMITED
PARTNERSHIP
By: Enron Capital Management II Limited
Partnership, its General Partner
By: Enron Capital II Corp.,
its General Partner
/s/ Xxxx X. Xxxxxx III
-----------------------------
Name: Xxxx X. Xxxxxx III
Title: Agent and Xxxxxxxx-xx-Xxxx
X-0
