Stock Purchase Agreement
among
WellTech Eastern, Inc.,
Xxxxxx X. Xxxxxx, Xx.
Xxxxxx Xxxxxxx Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxx Xxxxx Xxxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
and
Xxxxxxx Xxxxxx Xxxxxx
Dated as of August 22, 1997
TABLE OF CONTENTS
(continued)
Page
TABLE OF CONTENTS
Page
ARTICLE 1Purchase and Sale
1.1. Purchase and Sale of the Company Shares. 1
1.2. Adjustment of Purchase Price. 1
1.3. Closing. 2
1.4. Closing Deliveries. 2
1.4.1. Opinion of Buyer's Counsel.2
1.4.2. Opinion of Shareholders' Counsel. 3
1.4.3. Lease of certain Real Estate. 3
1.4.4. Deed Without Warranty. 3
1.5. Resignations and Employment of Certain Persons. 3
1.6. Payment of Certain Indebtedness; Release of Guarantees 3
ARTICLE 2 Representations and Warranties
2.1. Representations and Warranties of the Shareholders. 4
2.1.1. Organization and Standing.4
2.1.2. Agreement Authorized and its Effect on Other Obligations. 4
2.1.3. Capitalization. 4
2.1.4. Ownership of the Company Shares. 4
2.1.5. No Subsidiaries 5
2.1.6. Financial Statements 5
2.1.7. Liabilities 5
2.1.8. Additional Company Information 5
2.1.9. No Defaults. 7
2.1.10. Absence of Certain Changes and Events 8
2.1.11. Taxes 8
2.1.12. Intellectual Property 9
2.1.13. Title to and Condition of Assets 9
2.1.14. Contracts. 9
2.1.15. Licenses and Permits. 9
2.1.16. Litigation 10
2.1.17. Environmental Compliance. 10
2.1.18. Compliance with Other Laws11
2.1.19. ERISA Plans and Labor Issues 11
2.1.20. Investigations; Litigation12
2.1.21. Absence of Certain Business Practices 12
2.1.22. No Untrue Statements. 12
2.1.23. Consents and Approvals. 13
2.1.24. Finder's Fee 13
2.2. Representations and Warranties of Buyer 13
2.2.1. Organization and Good Standing. 13
2.2.2. Agreement Authorized and its Effect on Other Obligations. 13
ARTICLE 3Additional Agreements
3.1. Noncompetition 13
3.2. Purchase and Sale of Certain Assets. 14
3.3. Further Assurances. 14
3.4. Public Announcements. 14
ARTICLE 4Indemnification
4.1. Indemnification by the Shareholders 15
4.2. Indemnification by Buyer 15
4.3. Indemnification Procedure 15
ARTICLE 5Miscellaneous
5.1. Survival of Representations, Warranties and Covenants 16
5.2. Entirety 16
5.3. Counterparts. 16
5.4. Notices and Waivers. 16
5.5. Table of Contents and Captions. 17
5.6. Successors and Assigns. 17
5.7. Severability. 17
5.8. Applicable Law. 17
Stock Purchase Agreement
This Stock Purchase Agreement (this "Agreement") is entered into as of
August 22, 1997, by and among WellTech Eastern, Inc., a Delaware corporation
("Buyer"), and Xxxxxx X. Xxxxxx, Xx., Xxxxxx Xxxxxxx Xxxxxx, Xxxxxx X. Xxxxxx,
Xxxxx Xxxxx Xxxxxx, Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx, and Xxxxxxx Xxxxxx Xxxxxx
(collectively, the "Shareholders").
WITNESSETH :
Whereas, Buyer is a corporation duly organized and validly existing under
the laws of the State of Delaware, with its principal executive offices at Xxx
Xxxxx Xxxxxx, Xxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000;
Whereas, Xxxxxx Well Service, Inc. (the "Company") is a corporation duly
organized and validly existing under the laws of the State of Louisiana, with
its principal executive offices at 0000 Xxxxxxx 00 Xxxx, Xxxxxxxx, Xxxxxxxxx
00000;
Whereas, the Shareholders own 20,500 shares (the "Company Shares") of
common stock, par value $1.00 per share, of the Company (the "Company Common
Stock"), which constitutes all of the issued and outstanding shares of capital
stock of the Company; and
Whereas, the Shareholders desire to sell to Buyer, and Buyer desires to
purchase from the Shareholders, all of the issued and outstanding capital stock
of the Company.
Now, Therefore, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto hereby agree as
follows:
I. ARTICLE
Purchase and Sale
A. Purchase and Sale of the Company Shares. Subject to the terms and
conditions of this Agreement, on the date hereof, the Shareholders agree to sell
and convey to Buyer, free and clear of all Encumbrances (as defined in Section
hereof), and Buyer agrees to purchase and accept from the Shareholders, all of
the Company Shares. In consideration of the sale of the Company Shares, Buyer
shall pay to the Shareholders a purchase price of $21,000,000 (the "Purchase
Price") in cash by wire transfer of immediately available funds, and the Cash
Adjustment Payment (as defined in Section hereof), if any, in accordance with
Section hereof.
A. Adjustment of Purchase Price. Buyer shall cause to be prepared and
delivered to the Shareholders a consolidated balance sheet of the Company as of
the date hereof (the "Final Balance Sheet") within 60 days after the date
hereof, which balance sheet will be prepared in accordance with generally
accepted accounting principles, consistently applied in all respects (which
shall not include any reserve or accruals for employee termination costs). Buyer
and the Shareholders shall jointly review the Final Balance Sheet, and endeavor
in good faith to resolve all disagreements regarding the entries thereon and
reach a final determination thereof within 90 days from the date hereof. In the
event that the parties cannot agree on the entries to be placed on the Final
Balance Sheet, the dispute will be resolved by an independent accounting firm
mutually agreed to by the Shareholders and Buyer (such agreement not to be
unreasonably withheld or delayed) whose resolution shall be binding on and
enforceable against the parties hereto. Within 10 days of reaching such final
determination, the following adjusting payments shall be made:
(1) If the Final Net Current Value of the Company (as defined below) (a)
exceeds $1,000,000, Buyer shall pay to the Shareholders the amount of such
excess (the "Cash Adjustment Payment") or (b) is less than $1,000,000, the
Shareholders shall pay, pro rata according to each Shareholder's percentage
ownership of the Company immediately prior to the Closing (as defined herein),
to Buyer the amount of such difference; and
(2) An amount equal to the capital expenditures made by the Company since
the Buyer's letter of intent dated July 17, 1997 (the "Letter") and approved by
the Buyer in its sole and absolute discretion (the "Approved Capital
Expenditures") shall be paid to the Shareholders.
The term "Final Net Current Value of the Company" means the dollar value of
the amount by which the "Total Current Assets" plus the "Total Other Assets,"
excluding "Land," as recorded on the Final Balance Sheet, exceeds the "Total
Liabilities," excluding "Income Taxes Payable," but including $___________,
representing the aggregate amount of the payment of debt of the Company made by
Buyer at the Closing, as recorded on the Final Balance Sheet. The parties
expressly agree that the Cash Adjustment Payment will not include any income tax
liability of the Company for 1997.
A. Closing. Consummation of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Bank One, N.A. in Shreveport,
Louisiana on the date hereof (the "Closing Date"), unless another time, place or
date is agreed to by the Shareholders and the Buyer.
A. Closing Deliveries. At the Closing, (a) the Shareholders shall deliver
to Buyer duly and validly issued certificate(s) representing all shares of
Company Shares owned beneficially or of record by them, each such certificate to
be duly endorsed in blank and in good form for transfer, or accompanied by stock
powers duly executed in blank sufficient and in good form to properly transfer
such shares to Buyer, (b) the Shareholders and Buyer shall have delivered to one
another all other documents, instruments and agreements as required under this
Agreement, (c) Buyer shall deliver to the Shareholders the cash purchase price
payable at Closing as provided in Section by wire transfer of immediately
available funds, and (d) the Buyer and Shareholders will deliver to one another
the opinions of counsel, lease and deed without warranty as described below:
1. Opinion of Buyer's Counsel. The Buyer shall deliver a favorable opinion,
dated as of the Closing Date, from Xxxxxx & Xxxxxx, L.L.P., counsel for the
Buyer, in form and substance satisfactory to the Shareholders, to the effect
that (i) the Buyer has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its state of organization;
(ii) all corporate proceedings required to be taken by or on the part of the
Buyer to authorize the execution of this Agreement and the implementation of the
transactions contemplated hereby have been taken; and (iii) this Agreement has
been duly executed and delivered by, and is the legal, valid and binding
obligation of the Buyer and is enforceable against Buyer in accordance with its
terms, except as enforceability may be limited by (a) equitable principles of
general applicability or (b) bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws affecting the rights of creditors generally. In
rendering such opinion, such counsel may rely upon (i) certificates of public
officials and of officers of the Buyer as to matters of fact and (ii) the
opinion or opinions of other counsel, which opinions shall be reasonably
satisfactory to the Shareholders, as to matters other than federal or Texas law.
1. Opinion of Shareholders' Counsel. The Shareholders shall deliver a
favorable opinion, dated the Closing Date, from Nelson, Hammond, & Self, P.C.,
counsel to the Shareholders, in form and substance satisfactory to Buyer, to the
effect that (i) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Louisiana and
is qualified to transact business in every jurisdiction in which the nature of
the Company's contacts require such qualification, (ii) all outstanding shares
of the Company Common Stock have been validly issued and are fully paid,
nonassessable and free of preemptive rights; (iii) all of the Company Shares are
owned beneficially and of record by the Shareholders free of any Encumbrances;
(iv) the Company owns all of its assets free and clear of any Encumbrances other
than those Encumbrances listed on the Balance Sheet or Schedules hereto, and
(v) this Agreement has been duly executed and delivered by, and is the legal,
valid and binding obligation of the Shareholders and is enforceable against the
Shareholders in accordance with its terms, except as the enforceability may be
limited by (a) equitable principles of general applicability or (b) bankruptcy,
insolvency, reorganization, fraudulent conveyance or similar laws affecting the
rights of creditors generally. In rendering such opinion, such counsel may rely
upon (i) certificates of public officials and of officers of the Company or the
Shareholders as to matters of fact and (ii) on the opinion or opinions of other
counsel, which opinions shall be reasonably satisfactory to Buyer, as to matters
other than federal or Louisiana law.
1. Lease of certain Real Estate. Buyer and the Shareholders shall each
deliver leases regarding certain real estate to be owned after the Closing by
Xxxxxx X. Xxxxxx, Xx., each of which is attached hereto in Exhibit 1.4.3.
1. Deed Without Warranty. Buyer shall deliver to Xxxxxx X. Xxxxxx, Xx. or
an entity controlled by Xxxxxx X. Xxxxxx, Xx. the deeds regarding certain real
estate owned prior to the Closing by the Company, each of which is attached
hereto as Exhibit 1.4.4.
A. Resignations and Employment of Certain Persons. At the Closing, each of
the officers and directors of the Company will resign, and Buyer will commence
employment of Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx, and Xxxxxx X. Xxxxxx.
A. Payment of Certain Indebtedness; Release of Guarantees. At the Closing,
Buyer will pay or cause to be paid all the debt obligations set forth in
Schedule 1.6. Within 60 days of the Closing, Buyer will cause to be released all
personal guarantees of Xxxxxx X. Xxxxxx, Xx. regarding indebtedness or other
obligations of the Company to parties other than Buyer or the Company.
I. ARTICLE
Representations and Warranties
A. Representations and Warranties of the Shareholders. Each of the
Shareholders jointly and severally represents and warrants to Buyer as follows:
1. Organization and Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Louisiana,
has full requisite corporate power and authority to carry on its business as it
is currently conducted, and to own and operate the properties currently owned
and operated by it, and is duly qualified or licensed to do business and is in
good standing as a foreign corporation authorized to do business in all
jurisdictions in which the character of the properties owned or the nature of
the business conducted by it would make such qualification or licensing
necessary.
1. Agreement Authorized and its Effect on Other Obligations. Xxxxxx X.
Xxxxxx, Xx., Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx, and Xxxxx X. Xxxxxx are
residents of Louisiana, and Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx, and Xxxxxxx X.
Xxxxxx are residents of Texas. Each of the Shareholders is above the age of 18
years and has the legal capacity and requisite power and authority to enter
into, and perform his obligations under this Agreement. This Agreement is a
valid and binding obligation of each of the Shareholders enforceable against
each of the Shareholders in accordance with its terms. The execution, delivery
and performance of this Agreement by the Company and each of the Shareholders
will not conflict with or result in a violation or breach of any term or
provision of, nor constitute a default under (i) the Certificate of
Incorporation or Bylaws of the Company or (ii) any obligation, indenture,
mortgage, deed of trust, lease, contract or other agreement to which the Company
or either of the Shareholders is a party or by which the Company or either of
the Shareholders or their respective properties are bound.
1. Capitalization. The authorized capitalization of the Company consists of
25,000 shares of Company Common Stock, of which, as of the date hereof, 20,500
shares are issued and outstanding and held beneficially and of record by the
Shareholders. On the date hereof, the Company does not have any outstanding
options, warrants, calls or commitments of any character relating to any of its
authorized but unissued shares of capital stock. All issued and outstanding
shares of Company Common Stock are validly issued, fully paid and non-assessable
and are not subject to preemptive rights. None of the outstanding shares of
Company Common Stock is subject to any voting trusts, voting agreement or other
agreement or understanding with respect to the voting thereof, nor is any proxy
in existence with respect thereto.
1. Ownership of the Company Shares. The Shareholders hold good and valid
title to all of the Company Shares, free and clear of all Encumbrances. The
Shareholders possess full authority and legal right to sell, transfer and assign
the Company Shares to Buyer, free and clear of all Encumbrances. Upon transfer
to Buyer by the Shareholders of the Company Shares, Buyer will own the Company
Shares free and clear of all Encumbrances. There are no claims pending or, to
the knowledge of any of the Shareholders, threatened, against the Company or any
of the Shareholders that concern or affect title to the Company Shares, or that
seek to compel the issuance of capital stock or other securities of the Company.
1. No Subsidiaries. Except as specified in Schedule hereto, there is no
corporation, partnership, joint venture, business trust or other legal entity in
which the Company, either directly or indirectly through one or more
intermediaries, owns or holds beneficial or record ownership of the outstanding
voting securities.
1. Financial Statements. The Company has delivered to Buyer copies of the
Company's balance sheet as of December 31, 1996, a copy of which is attached
hereto as Schedule (a) (the "1996 Balance Sheet"), and related statements of
income (collectively, the "Financial Statements"), as at and for the year ended
as of December 31, 1996 (the "1996 Balance Sheet Date"). The Financial
Statements are complete in all material respects. The Financial Statements
present fairly the financial condition of the Company as of the dates and for
the periods indicated. The Financial Statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis. The
accounts receivable reflected in the 1996 Balance Sheet, or which have been
thereafter acquired by the Company, have been collected or are collectible at
the aggregate recorded amounts thereof less applicable reserves, which reserves
are adequate. The Company has also delivered to Buyer copies of the Company's
unaudited balance sheet as of June 30, 1997, a copy of which is attached hereto
as Schedule 2.1.6(b) (the "Interim Balance Sheet"). Except as set forth in
Schedule 2.1.6(b), the Interim Balance Sheet is complete in all material
respects and presents fairly the financial condition of the Company as of the
date indicated. Except as set forth in Schedule 2.1.6(b), the Interim Balance
Sheet has been prepared in accordance with generally accepted accounting
principles applied on a consistent basis. The accounts receivable reflected in
the Interim Balance Sheet, or which have been thereafter acquired by the
Company, have been collected or are collectable at the aggregate recorded
amounts thereof less applicable reserves, which reserves are adequate.
1. Liabilities. Except as disclosed on Schedule hereto, the Company does
not have any liabilities or obligations, either accrued, absolute or contingent,
nor do any of the Shareholders have any knowledge of any potential liabilities
or obligations, other than those (i) reflected or reserved against in the
Interim Balance Sheet, (ii) described in Schedule 2.1.6(b) or (iii) incurred in
the ordinary course of business since the date of the Interim Balance Sheet that
would not materially adversely affect the value and conduct of the business of
the Company.
1. Additional Company Information. Attached as Schedule hereto are true,
complete and correct lists of the following items:
a) Real Estate. All real property and structures thereon owned, leased or
subject to a contract of purchase and sale, or lease commitment, by the Company,
with a description of the nature and amount of any Encumbrances thereon. The
term "Encumbrances" means all liens, security interests, pledges, mortgages,
deeds of trust, claims, rights of first refusal, options, charges, restrictions
or conditions to transfer or assignment, liabilities, obligations, privileges,
equities, easements, rights-of-way, limitations, reservations, restrictions and
other encumbrances of any kind or nature;
a) Machinery and Equipment. All rigs, carriers, rig equipment, machinery,
transportation equipment, tools, equipment, furnishings, and fixtures owned,
leased or subject to a contract of purchase and sale, or lease commitment, by
the Company with a description of the nature and amount of any Encumbrances
thereon;
a) Inventory. All inventory items or groups of inventory items owned by the
Company, excluding raw materials and work in process;
a) Receivables. All accounts and notes receivable of the Company, together
with (i) aging schedules by invoice date and due date, (ii) the amounts provided
for as an allowance for bad debts, (iii) the identity and location of any asset
in which the Company holds a security interest to secure payment of the
underlying indebtedness, and (iv) a description of the nature and amount of any
Encumbrances on such accounts and notes receivable;
a) Payables. All accounts and notes payable of the Company, together with
an appropriate aging schedule. The amounts owed represented by the line item
"Long Term Liabilities" on the Interim Balance Sheet still owed and outstanding
(including accrued and unpaid interest) as of the date hereof is $____________;
a) Insurance. All insurance policies or bonds currently maintained by the
Company, including title insurance policies, with respect to the Company,
including those covering the Company's properties, rigs, machinery, equipment,
fixtures, employees and operations, as well as a listing of any premiums,
deductibles, audit adjustments or retroactive adjustments due or pending on such
policies or any predecessor policies;
a) Contracts. All contracts, including leases under which the Company is
lessor or lessee, which are to be performed in whole or in part after the date
hereof;
a) Employee Compensation Plans. All bonus, incentive compensation, deferred
compensation, profit-sharing, retirement, pension, welfare, group insurance,
death benefit, or other employee benefit or fringe benefit plans, arrangements
or trust agreements of the Company or any employee benefit plan maintained by
the Company, together with copies of the most recent reports with respect to
such plans, arrangements, or trust agreements filed with any governmental agency
and all Internal Revenue Service determination letters and other correspondence
from governmental entities that have been received with respect to such plans,
arrangements or agreements (collectively, "Employee Plans");
a) Salaries. The names and salary rates of all present employees of the
Company, and, to the extent existing on the date of this Agreement, all
arrangements with respect to any bonuses to be paid to them from and after the
date of this Agreement;
a) Bank Accounts. The name of each bank in which the Company has an account
and the names of all persons authorized to draw thereon;
a) Employee Agreements. Any collective bargaining agreements of the Company
with any labor union or other representative of employees, including amendments,
supplements, and written or oral understandings, and all employment and
consulting and severance agreements of the Company;
a) Intellectual Property. All patents, patent applications, trademarks and
service marks (including registrations and applications therefor), trade names,
copyrights and written know-how, trade secrets and all other similar proprietary
data and the goodwill associated therewith (collectively, the "Intellectual
Property") used by the Company;
a) Trade Names. All trade names, assumed names and fictitious names used or
held by the Company, whether and where such names are registered and where used;
a) Licenses and Permits. All permits, authorizations, certificates,
approvals, registrations, variances, waivers, exemptions, rights-of-way,
franchises, ordinances, licenses and other rights of every kind and character
(collectively, the "Permits") of the Company under which it conducts its
business;
a) Promissory Notes. All long-term and short-term promissory notes,
installment contracts, loan agreements, credit agreements, and any other
agreements of the Company relating thereto or with respect to collateral
securing the same;
a) Guaranties. All indebtedness, liabilities and commitments of others and
as to which the Company is a guarantor, endorser, co-maker, surety, or
accommodation maker, or is contingently liable therefor and all letters of
credit, whether stand-by or documentary, issued by any third party;
a) Reserves and Accruals. All accounting reserves and accruals maintained
in the Interim Balance Sheet and Schedule 2.1.6(b);
a) Leases. All leases to which the Company is a party; and
a) Environment. All environmental permits, approvals, certifications,
licenses, registrations, orders and decrees applicable to current operations
conducted by the Company and all environmental audits, assessments,
investigations and reviews conducted by the Company within the last five years
or otherwise in the Company's possession on any property owned, leased or used
by the Company.
1. No Defaults. The Company is not a party to, or bound by, any contract or
arrangement of any kind to be performed after the date hereof, nor is the
Company in default in any obligation or covenant on its part to be performed
under any obligation, lease, contract, order, plan or other arrangement.
1. Absence of Certain Changes and Events. Except as disclosed on Schedule
hereto and other than as a result of the transactions contemplated by this
Agreement, since June 30, 1997, there has not been:
a) Financial Change. Any adverse change in the financial condition,
backlog, operations, assets, liabilities or business of the Company;
a) Property Damage. Any material damage, destruction, or loss to the
business or properties of the Company (whether or not covered by insurance);
a) Dividends. Any declaration, setting aside, or payment of any dividend or
other distribution in respect of the Company Common Stock, or any direct or
indirect redemption, purchase or any other acquisition by the Company of any
such stock;
a) Capitalization Change. Any change in the capital stock or in the number
of shares or classes of the Company's authorized or outstanding capital stock as
described in Section hereof;
a) Labor Disputes. Any labor or employment dispute of whatever nature; or
a) Other Material Changes. Any other event or condition known to any of the
Shareholders particularly pertaining to and adversely affecting the operations,
assets or business of the Company.
1. Taxes. All federal, state and local income, value added, sales, use,
franchise, gross revenue, turnover, excise, payroll, property, employment,
customs, duties and any and all other tax returns, reports, and estimates have
been filed with appropriate governmental agencies, domestic and foreign, by the
Company for each period for which any such returns, reports, or estimates were
due (taking into account any extensions of time to file before the date hereof);
all such returns are true and correct; the Company has only done business in
Arkansas, Louisiana, Mississippi, and Texas and all taxes shown by such returns
to be payable and any other taxes due and payable have been paid. No waiver of
any statute of limitations executed by the Company with respect to any income or
other tax is in effect for any period. Except for the Company's 1995 income tax
return, the income tax returns of the Company have never been examined by the
Internal Revenue Service or the taxing authorities of any other jurisdiction.
There are no tax liens on any assets of the Company except for taxes not yet
currently due. The Company is not subject to any tax-sharing or allocation
agreement. The Company is not, nor has it ever attempted to become a Subchapter
S-Corporation under the Internal Revenue Code of 1986, as amended. The Company
is not and never has been, a member of a consolidated group subject to Treasury
Regulation 1.1502-6 or any similar provision.
1. Intellectual Property. The Company owns or possesses licenses to use all
Intellectual Property that is either material to the business of the Company or
that is necessary for the rendering of any services rendered by the Company and
the use or sale of any equipment or products used or sold by the Company,
including all such Intellectual Property listed in Schedule hereto (the
"Required Intellectual Property"). The Required Intellectual Property is owned
or licensed by the Company free and clear of any Encumbrance. The Company has
not granted to any other person any license to use any Required Intellectual
Property. The Company has not infringed, misappropriated, or conflicted with,
the Intellectual Property rights of others in connection with the use by the
Company of the Required Intellectual Property or otherwise in connection with
the Company's operation of its business, nor has the Company has received any
notice of such infringement, misappropriation, or conflict such Intellectual
Property rights of others.
1. Title to and Condition of Assets. Except as disclosed on Schedule
hereto, the Company has good, indefeasible and marketable title to all its
properties, interests in properties and assets, real and personal, reflected in
the Interim Balance Sheet and Schedule 2.1.6(b) or in Schedule hereto, free and
clear of any Encumbrance of any nature whatsoever, except Encumbrances reflected
in the Interim Balance Sheet and Schedule 2.1.6(b) or in Schedule hereto. All
leases pursuant to which the Company leases (whether as lessee or lessor) any
substantial amount of real or personal property are in good standing, valid, and
effective; and there is not, under any such leases, any existing default or
event of default or event which with notice or lapse of time, or both, would
constitute a default by the Company and in respect to which the Company has not
taken adequate steps to prevent a default from occurring. The buildings and
premises of the Company that are used in its business are in good operating
condition and repair, subject only to ordinary wear and tear. All rigs, rig
equipment, machinery, transportation equipment, tools and other major items of
equipment of the Company are in good operating condition and in a state of good
maintenance and repair, ordinary wear and tear excepted, and are free from any
known defects except as may be repaired by routine maintenance. All such assets
conform to all applicable laws governing their use. The Company has not violated
any law, statute, ordinance, or regulation relating to any such assets, nor has
any notice of such violation been received by the Company or any of the
Shareholders.
1. Contracts. All contracts, leases, plans or other arrangements to which
the Company is a party, by which it is bound or to which it or its assets are
subject are in full force and effect, and constitute valid and binding
obligations of the Company. The Company is not, and to the knowledge of the
Company or any of the Shareholders, no other party to any such contract, lease,
plan or other arrangement is, in default thereunder, and no event has occurred
which (with or without notice, lapse of time, or the happening of any other
event) would constitute a default thereunder. No contract has been entered into
on terms which could reasonably be expected to have an adverse effect on the
Company. Neither the Company nor any of the Shareholders has received any
information which would cause such the Company or such Shareholders to conclude
that any customer of the Company will (or is likely to) cease doing business
with the Company (or its successors) as a result of the consummation of the
transactions contemplated hereby.
1. Licenses and Permits. The Company possesses all Permits necessary under
law or otherwise for the Company to conduct its business as now being conducted
and to construct, own, operate, maintain and use its assets in the manner in
which they are now being constructed, operated, maintained and used, including
all such Permits listed in Schedule hereto (collectively, the "Required
Permits"). Each of the Required Permits and the Company's rights with respect
thereto is valid and subsisting, in full force and effect, and enforceable by
the Company subject to administrative powers of regulatory agencies having
jurisdiction, and will continue in full force and effect after the Closing Date.
The Company is in compliance in all respects with the terms of each of the
Required Permits. None of the Required Permits have been, or to the knowledge of
the Company or any of the Shareholders, is threatened to be, revoked, canceled,
suspended or modified.
1. Litigation. Except as set forth in Schedule hereto, there is no suit,
action, or legal, administrative, arbitration, or other proceeding or
governmental investigation pending to which the Company is a party or, to the
knowledge of any of the Company or the Shareholders, might become a party or
which particularly affects the Company or its assets, nor is any change in the
zoning or building ordinances directly affecting the real property or leasehold
interests of the Company, pending or, to the knowledge of any of the any of the
Shareholders, threatened.
1. Environmental Compliance.
a) Environmental Conditions. There are no environmental conditions or
circumstances, including, without limitation, the presence or release of any
Substance of Environmental Concern, on any property presently or previously
owned, leased or operated by the Company, or on any property to which any
Substance of Environmental Concern or waste generated by the Company's
operations or use of its assets were disposed of, which would have or result in
a material adverse effect on the business or business prospects of the Company.
The term "Substance of Environmental Concern" means (a) any gasoline, petroleum
(including crude oil or any fraction thereof), petroleum product,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutant,
contaminant, radiation and any other substance of any kind, whether or not any
such substance is defined as toxic or hazardous under any Environmental Law (as
defined in Section hereof), that is regulated pursuant to or could give rise to
liability under any Environmental Law;
a) Permits, etc. The Company has, and within the period of all applicable
statutes of limitations has had, in full force and effect all environmental
Permits required to conduct its operations, and is, within the period of all
applicable statutes of limitations has been, operating in compliance thereunder;
a) Compliance. The Company's operations and use of its assets are, and
within the period of all applicable statutes of limitations, have been in
compliance with applicable Environmental Law. "Environmental Law" as used herein
means any and all laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, and other legally enforceable requirements (including, without
limitation, common law) of the United States, or any state, local, municipal or
other governmental authority or quasi-governmental authority, regulating,
relating to, or imposing liability or standards of conduct concerning protection
of the environmental or of human health, or employee health and safety as from
time to time has been or is now in effect;
a) Environmental Claims. No notice has been received by the Company or any
of the Shareholders from any entity, governmental agency or individual regarding
any existing, pending or threatened investigation, inquiry, enforcement action.
litigation, or liability, including, without limitation any claim for remedial
obligations, response costs or contribution, relating to any Environmental Law;
a) Enforcement. The Company, and to the knowledge of any of the
Shareholders, no predecessor of the Company or other party acting on behalf of
the Company, has entered into or agreed to any consent, decree, order,
settlement or other agreement, nor is subject to any judgment, decree, order or
other agreement, in any judicial, administrative, arbitral, or other forum,
relating to compliance with or liability under any Environmental Law;
a) Liabilities. The Company has not assumed or retained, by contract or
operation of law, any liabilities of any kind, fixed or contingent, known or
unknown, under any Environmental Law;
a) Renewals. Neither the Company nor any of the Shareholders knows of any
reason the Company (or its successors) would not be able to renew without
material expense any of the permits, licenses, or other authorizations required
pursuant to any Environmental Law to conduct and use any of the Company's
current or planned operations; and
a) Asbestos and PCBs. No material amounts of friable asbestos currently
exist on any property owned or operated by the Company, nor do polychlorinated
biphenyls exist in concentrations of 50 parts per million or more in electrical
equipment owned or being used by the Company in its operations or on its
properties.
1. Compliance with Other Laws. The Company is not in violation of or in
default with respect to, or in alleged violation of or alleged default with
respect to, the Occupational Safety and Health Act (29 U.S.C. 651 et seq.) as
amended, or any other applicable law or any applicable rule, regulation, or any
writ or decree of any court or any governmental commission, board, bureau,
agency, or instrumentality, or delinquent with respect to any report required to
be filed with any governmental commission, board, bureau, agency or
instrumentality.
1. ERISA Plans and Labor Issues. Except for the Company's employee benefit
plans listed in Schedule 2.1.19 (the "Benefit Plans"), the Company does not
currently sponsor, maintain or contribute to and has not at any time sponsored,
maintained or contributed to any other employee benefit plan which is or was
subject to any provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). Except for the Benefit Plans, the Company does not
maintain any plan, program, policy, contract, agreement or other arrangement
that provides pension, retirement, medical, dental, disability, life insurance
or other benefits to any current or former employees of the Company, including
any retired employees, or their beneficiaries or dependents. The Company is not
obligated to pay any severance or benefits to any employee or former employee of
the Company as the result of any change in the ownership or control of the
Company. The Company has not engaged in any unfair labor practices which could
reasonably be expected to result in an adverse effect on its operations or
assets. The Company does not have any dispute with any of its existing or former
employees. There are no labor disputes or, to the knowledge of any of the
Shareholders, any disputes threatened by current or former employees of the
Company. All the Benefit Plans have been maintained in full compliance with all
applicable requirements of ERISA and other applicable law, and there are no
claims under the Benefit Plans except routine claims for benefits.
1. Investigations; Litigation. No investigation or review by any
governmental entity with respect to the Company or any of the transactions
contemplated by this Agreement is pending or, to the knowledge of the Company or
any of the Shareholders, threatened, nor has any governmental entity indicated
to the Company or any of the Shareholders an intention to conduct the same, and
there is no action, suit or proceeding pending or, to the knowledge of any of
the Shareholders, threatened against or affecting the Company at law or in
equity, or before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, that either
individually or in the aggregate, does or is likely to result in any material
adverse change in the financial condition, properties or business of the
Company.
1. Absence of Certain Business Practices. Neither the Company nor any
officer, employee or agent of the Company, nor any other person acting on its
behalf, has, directly or indirectly, within the past five years, given or agreed
to give any gift or similar benefit to any customer, supplier, government
employee or other person who is or may be in a position to help or hinder the
business of the Company (or to assist the Company in connection with any actual
or proposed transaction) which (i) might subject the Company to any damage or
penalty in any civil, criminal or governmental litigation or proceeding, (ii) if
not given in the past, might have had a material adverse effect on the assets,
business or operations of the Company as reflected in the Financial Statements,
or (iii) if not continued in the future, might materially adversely effect the
assets, business operations or prospects of the Company or which might subject
the Company to suit or penalty in a private or governmental litigation or
proceeding.
1. No Untrue Statements. The Company and each of the Shareholders have made
available to Buyer true, complete and correct copies of all contracts, employee
benefit plans, documents concerning all litigation and administrative
proceedings, licenses, permits, insurance policies, lists of suppliers and
customers, and records relating principally to the Company's assets and
business, and such information covers all commitments and liabilities of the
Company relating to its business or assets. This Agreement and the agreements
and instruments to be entered into in connection herewith do not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made herein and therein not misleading in any material
respect.
1. Consents and Approvals. No consent, approval or authorization of, or
filing or registration with, any governmental or regulatory authority, or any
other person or entity, is required to be made or obtained by the Company or any
of the Shareholders in connection with the execution, delivery or performance of
this Agreement or the consummation of the transactions contemplated hereby.
1. Finder's Fee. Any and all brokerage commissions, finder's fees or any
similar payments made or incurred relative to this Agreement and the
transactions contemplated hereby shall be paid solely by the Shareholders.
Neither the Company nor the Buyer shall incur, or otherwise be liable for in any
way, any brokerage commission, finder's fee, or any similar payment relative to
this Agreement or the transactions contemplated hereby.
A. Representations and Warranties of Buyer. Buyer represents and warrants
to each of the Shareholders as follows
1. Organization and Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
has full requisite corporate power and authority to carry on its business as it
is currently conducted, and to own and operate the properties currently owned
and operated by it, and is duly qualified or licensed to do business and is in
good standing as a foreign corporation authorized to do business in all
jurisdictions in which the character of the properties owned or the nature of
the business conducted by it would make such qualification or licensing
necessary.
1. Agreement Authorized and its Effect on Other Obligations. The
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Buyer, and this
Agreement is a valid and binding obligation of Buyer enforceable in accordance
with its terms.
I. ARTICLE
Additional Agreements
A. Noncompetition. Except for the operation of the drilling rig referred to
in Section 3.2 and as otherwise consented to or approved in writing by Buyer,
each of the Shareholders agrees that for a period of 60 months from the date
hereof, such Shareholder will not, directly or indirectly, acting alone or as a
member of a partnership or as an officer, director, employee, consultant,
representative, holder of, or investor in as much as 5% of any security of any
class of any corporation or other business entity (i) engage in competition with
the business or businesses conducted by the Company, Buyer or any affiliate of
Buyer on the date hereof, or in any service business the services of which are
provided and marketed by the Company, Buyer or any affiliate of Buyer on the
date hereof in any state of the United States or any foreign country in which
the Company, Buyer or any affiliate of Buyer transacts business on the date
hereof; (ii) request any present customers or suppliers of the Company to
curtail or cancel their business with Buyer or any affiliate of Buyer;
(iii) disclose to any person, firm or corporation any trade, technical or
technological secrets of the Company, Buyer or any affiliate of Buyer or any
details of their organization or business affairs; or (iv) induce or actively
attempt to influence any employee of the Company, Buyer or any affiliate of
Buyer to terminate his employment. Each of the Shareholders agrees that if
either the length of time or geographical area set forth in this Section is
deemed too restrictive in any court proceeding, the court may reduce such
restrictions to those which it deems reasonable under the circumstances. The
obligations expressed in this Section are in addition to any other obligations
that the Shareholders may have under the laws of the states in which they do
business requiring an employee of a business or a shareholder who sells his
stock in a corporation to limit his activities so that the goodwill and business
relations of his employer and of the corporation whose stock he has sold (and
any successor corporation) will not be materially impaired. Each of the
Shareholders further agrees and acknowledges that the Company, Buyer and its
affiliates do not have any adequate remedy at law for the breach or threatened
breach by such Shareholder of this covenant, and agree that the Company, Buyer
or any affiliate of Buyer may, in addition to the other remedies which may be
available to it hereunder, file a suit in equity to enjoin such Shareholder from
such breach or threatened breach. If any provisions of this Section are held to
be invalid or against public policy, the remaining provisions shall not be
affected thereby. Each of the Shareholders acknowledges that the covenants set
forth in this Section are being executed and delivered by such Shareholder in
consideration of the covenants of Buyer contained in this Agreement, and for
other good and valuable consideration, receipt of which is hereby acknowledged.
A. Purchase and Sale of Certain Assets. All real estate owned in fee simple
by the Company will, at the Closing, be sold to Xxxxxx X. Xxxxxx or an entity
controlled by Xxxxxx X. Xxxxxx for $2,000,000 payable by wire transfer at the
Closing in immediately available funds. The Xxxxxx-Xxxxxxxx XX-000 drilling rig
known as Remco Rig 2 and related equipment, including a 10,000 foot drill
string, will, at Closing, be sold to Xxxxxx X. Xxxxxx or an entity controlled by
Xxxxxx X. Xxxxxx for $1,800,000 payable at Closing by wire transfer in
immediately available funds.
A. Further Assurances. From time to time, as and when requested by any
party hereto, any other party hereto shall execute and deliver, or cause to be
executed and delivered, such documents and instruments and shall take, or cause
to be taken, such further or other actions as may be reasonably necessary to
effectuate the transactions contemplated hereby.
A. Public Announcements. Except as authorized in writing by Buyer, the
Shareholders nor any of their respective Affiliates or agents shall issue any
press release or public announcement regarding the execution of this Agreement
or the transactions contemplated thereby except as required by applicable law.
The Shareholders hereby consent to Buyer's issuance of a press release
announcing the completion of the transactions contemplated by this Agreement.
I. ARTICLE
Indemnification
A. Indemnification by the Shareholders. In addition to any other remedies
available to Buyer under this Agreement, or at law or in equity, each of the
Shareholders shall jointly and severally indemnify, defend and hold harmless the
Company, Buyer and their affiliates and their respective officers, directors,
employees, agents and stockholders (collectively, the "Buyer Indemnified
Parties"), against and with respect to any and all claims, costs, damages,
losses, expenses, obligations, liabilities, recoveries, suits, causes of action
and deficiencies, including interest, penalties and reasonable fees and expenses
of attorneys, consultants and experts (collectively, the "Damages") that the
Buyer Indemnified Parties shall incur or suffer, which arise, result from or
relate to any breach by any of the Shareholders of (or the failure of any of the
Shareholders to perform) their respective representations, warranties, covenants
or agreements in this Agreement or in any schedule, certificate, exhibit or
other instrument furnished or delivered to Buyer by any of the Shareholders
under this Agreement.
A. Indemnification by Buyer. In addition to any other remedies available to
the Shareholders under this Agreement, or at law or in equity, Buyer shall
indemnify, defend and hold harmless each of the Shareholders against and with
respect to any and all Damages that such indemnitees shall incur or suffer,
which arise, result from or relate to any breach of, or failure by Buyer to
perform, any of its representations, warranties, covenants or agreements in this
Agreement or in any schedule, certificate, exhibit or other instrument furnished
or delivered to any of the Shareholders by or on behalf of Buyer under this
Agreement.
A. Indemnification Procedure. In the event that any party hereto discovers
or otherwise becomes aware of an indemnification claim arising under Article 4
of this Agreement, such indemnified party shall give written notice to the
indemnifying party, specifying such claim, and may thereafter exercise any
remedies available to such party under this Agreement; provided, however, that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of any obligations hereunder, to the extent the
indemnifying party is not materially prejudiced thereby. Further, promptly after
receipt by an indemnified party hereunder of written notice of the commencement
of any action or proceeding with respect to which a claim for indemnification
may be made pursuant to Article 4 hereof, such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party, give
written notice to the latter of the commencement of such action; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of any obligations hereunder, to
the extent the indemnifying party is not materially prejudiced thereby. In case
any such action is brought against an indemnified party, the indemnifying party
shall be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified, to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
such notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof unless the
indemnifying party has failed to assume the defense of such claim and to employ
counsel reasonably satisfactory to such indemnified person. An indemnifying
party who elects not to assume the defense of a claim shall not be liable for
the fees and expenses of more than one counsel in any single jurisdiction for
all parties indemnified by such indemnifying party with respect to such claim or
with respect to claims separate but similar or related in the same jurisdiction
arising out of the same general allegations. Notwithstanding any of the
foregoing to the contrary, the indemnified party will be entitled to select its
own counsel and assume the defense of any action brought against it if the
indemnifying party fails to select counsel reasonably satisfactory to the
indemnified party, the expenses of such defense to be paid by the indemnifying
party. No indemnifying party shall consent to entry of any judgment or enter
into any settlement with respect to a claim without the consent of the
indemnified party, which consent shall not be unreasonably withheld, or unless
such judgment or settlement includes as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability with respect to such claim. No indemnified party shall consent to
entry of any judgment or enter into any settlement of any such action, the
defense of which has been assumed by an indemnifying party, without the consent
of such indemnifying party, which consent shall not be unreasonably withheld or
delayed.
I. ARTICLE
Miscellaneous
A. Survival of Representations, Warranties and Covenants. All
representations, warranties, covenants and agreements made by the parties hereto
shall survive indefinitely without limitation, notwithstanding any investigation
made by or on behalf of any of the parties hereto. All statements contained in
any certificate, schedule, exhibit or other instrument delivered pursuant to
this Agreement shall be deemed to have been representations and warranties by
the respective party or parties, as the case may be, and shall also survive
indefinitely despite any investigation made by any party hereto or on its
behalf.
A. Entirety. This Agreement embodies the entire agreement among the parties
with respect to the subject matter hereof, and all prior agreements between the
parties with respect thereto are hereby superseded in their entirety.
A. Counterparts. Any number of counterparts of this Agreement may be
executed and each such counterpart shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one instrument.
A. Notices and Waivers. Any notice or waiver to be given to any party
hereto shall be in writing and shall be delivered by courier, sent by facsimile
transmission or first class registered or certified mail, postage prepaid,
return receipt requested:
If to Buyer:
Addressed to: With a copy to:
WellTech Eastern, Inc. Xxxxxx & Xxxxxx, L.L.P.
Two Tower Center, Tenth Floor 700 Louisiana, 00xx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000 Xxxxxxx, Xxxxx 00000-0000
Attn: General Counsel Attn: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
If to Shareholders:
Addressed to: With a copy to:
Xxxxxx X. Xxxxxx, Xx. Sydney X. Xxxxxx
0000 Xxxxxxx 00 Xxxx Xxxxxx, Xxxxxxx & Self, P.C.
Xxxxxxxx, Xxxxxxxxx 00000 000 Xxxxx Xxxxxx
Facsimile: (000) 000-0000 Xxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, with return receipt requested, shall be deemed
to be received on the third business day after so mailed, and if delivered by
courier or facsimile to such address, upon delivery during normal business hours
on any business day.
A. Table of Contents and Captions. The table of contents and captions
contained in this Agreement are solely for convenient reference and shall not be
deemed to affect the meaning or interpretation of any article, section, or
paragraph hereof.
A. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the successors and assigns of the
parties hereto.
A. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
A. Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the applicable laws of the State of Texas.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Shareholders have executed this Agreement and the
Buyer has caused this Agreement to be signed in its corporate name by its duly
authorized representative, all as of the day and year first above written.
BUYER:
WELLTECH EASTERN, INC.
By:
Name:
Title:
SHAREHOLDERS:
Xxxxxx X. Xxxxxx, Xx.
Xxxxxx Xxxxxxx Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxx Xxxxx Xxxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx Xxxxxx Xxxxxx
