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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into as of
the 8th day of January 2000, by and between XXXXX X. XXXXXX ("Seller"), SUNDOWN
OPERATING, INC. D/B/A SUNDOWN WELL SERVICE, a Texas corporation (the "Company"),
and SIERRA WELL SERVICE, INC., a Delaware corporation ("Purchaser").
RECITALS:
A. The Company is a Texas corporation based out of Sundown, Texas, which is
principally engaged in the well servicing business in the Permian Basin of West
Texas and Southeastern New Mexico (the "Business").
B. Seller owns all of the issued and outstanding capital stock of the
Company (the "Stock").
C. Seller desires to sell the Stock, and Purchaser desires to purchase the
same, upon and subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties, and covenants which are hereinafter set forth, and
other good and valuable consideration, the legal sufficiency of which are hereby
acknowledged, the parties hereto have agreed and do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
Section 1.01 THE STOCK. Subject to all of the terms and conditions of this
Agreement, Seller hereby agrees to sell, transfer, and deliver, and Purchaser
hereby agrees to purchase, pay for, and accept, at the Closing (hereinafter
defined), all of the Stock.
Section 1.02 PRE-CLOSING PURCHASE OF CERTAIN ASSETS. At or prior to
Closing, the Seller shall purchase for cash from the Company, without
representation, warranty, or recourse by or upon the Company, all of the
Company's right, title and interest in and to the assets listed on attached
SCHEDULE 1.02 (collectively, the "Excluded Assets") for the estimated total sum
of $2,824,196.99, with each individual asset having the purchase price allocated
thereto on SCHEDULE 1.02 (subject to adjustment at or prior to Closing as the
parties may mutually agree in writing). In connection with such purchase, upon
Closing, Seller agrees to indemnify and hold the Company and Purchaser harmless
from and against any and all claims, demands, causes of action, liabilities,
losses, and/or expenses (including, without limitation, reasonable attorneys'
fees and other expenses of litigation)
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arising from or in connection with the ownership, operation, and use of the
Excluded Assets for all periods from and after the date of the sale thereof by
the Company to Seller.
Section 1.03 PURCHASE PRICE. Subject to adjustment as hereinafter provided
in this Agreement, the total purchase price ("Purchase Price") for the Stock is
a sum equal to (A) $5,150,000.00 plus or minus (B) the "net financial assets"
(as defined below) of the Company as of the Closing Date ("NFA"), payable by
Purchaser to Seller as follows:
(1) Purchaser shall pay to Seller in immediately available funds at
the Closing a sum equal to (a) $4,150,000.00 plus or minus (b) an
amount equal to eighty percent (80%) of the NFA, as preliminarily
estimated at Closing pursuant to Section 5.09;
(2) Purchaser shall execute and deliver to Seller at Closing its
promissory note (the "Note") in the original principal amount of
$1,000,000.00, bearing interest at a floating rate equal to the
prime rate of interest quoted in the Wall Street Journal
published on the Friday most immediately preceding the Closing
Date and on the Friday most immediately preceding each ensuing
quarterly adjustment date, and payable to the order of Seller on
or before one year from date, said Note to be substantially
identical in form and substance to that attached hereto as
EXHIBIT A, to have certain optional equity conversion rights as
therein specified, and to be secured by liens and security
interests upon the tangible assets of the Company as of Closing
that are junior in priority to any existing liens or security
interests upon such assets as of the Closing, such liens and
security interests to be created by security documents
substantially identical in form and substance to those attached
hereto as EXHIBIT B (collectively, the "Security Documents"); and
(3) Purchaser shall pay the balance, if any, of the Purchase Price to
Seller in immediately available funds pursuant to and at the
conclusion of the post-Closing accounting procedures set forth in
Section 5.09 below.
As used in this Agreement, "net financial assets" shall mean the difference
between (a) "Current Assets" and (b) "Total Liabilities" less any "Deferred
Income Taxes," as those account groups or subgroups are shown on the Preliminary
Audited Balance Sheet (hereinafter defined), subject to modification and
adjustment in accordance with generally accepted accounting principles pursuant
to Section 5.09 to reflect changes between the date of the Preliminary Audited
Balance Sheet and the Closing Date.(i.e. TCA - (TL - DIT) = net financial
assets). The calculation of NFA as of the Closing Date shall, in particular, but
without limitation, give effect to the purchase of the Excluded Assets by Seller
from the Company and any tax liabilities occasioned to the Company from such
purchase.
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STOCK PURCHASE AGREEMENT PAGE 2
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE COMPANY
Seller and the Company hereby jointly and severally represent and warrant to
Purchaser as of the date of this Agreement as follows:
Section 2.01 ORGANIZATION AND QUALIFICATION; NO SUBSIDIARIES. The Company
is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation and has the requisite power
and authority to own, lease, and operate its assets and to carry on its business
as now being conducted. The Company has not received any notice of proceedings
relating to the revocation or modification of any such authorizations. The
Company is duly qualified or licensed to do business and is in good standing in
each jurisdiction where the character of the assets owned, leased, or operated
by it or the nature of its activities makes such qualification or licensing
necessary. The Company does not have any subsidiaries. The Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, or other business association or
entity.
Section 2.02 GOVERNING DOCUMENTS. The articles of incorporation and the
bylaws of the Company, true and correct copies of which have been furnished to
Purchaser, are in full force and effect and have not been modified, amended, or
rescinded. The Company is not in violation of its articles of incorporation or
bylaws.
Section 2.03 CAPITALIZATION OF THE COMPANY. The authorized capital stock of
the Company consists of 1,000,000 shares of common stock, no par value. As of
the date hereof, 2,086 shares of common stock of the Company are issued and
outstanding, all of which are validly issued, fully paid, and nonassessable (and
collectively constitute the Stock). The Company has issued an additional 500
shares of capital stock, all of which are held in treasury. None of such
treasury shares has been canceled and returned to the status of authorized, but
unissued stock. There are no options, warrants, or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or obligating the Company to issue or sell any
shares of capital stock of, or other equity interests in, the Company. There are
no obligations, contingent or otherwise, of the Company to repurchase, redeem,
or otherwise acquire any shares of the Stock or to provide funds to or make any
investment (in the form of a loan, capital contribution, or otherwise) in any
other person or entity.
Section 2.04 AUTHORITY RELATIVE TO THIS AGREEMENT. Seller and the Company
have full power and authority to execute and deliver this Agreement and to
perform their obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Seller and
the Company and their consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary action and no other
proceedings on
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STOCK PURCHASE AGREEMENT PAGE 3
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the part of Seller or the Company are necessary to authorize this Agreement or
to consummate the transactions so contemplated, except for necessary board
action to conclude the sale of the Excluded Assets pursuant to Section 1.02.
This Agreement has been duly and validly executed and delivered by Seller and
the Company and constitutes the legal, valid, and binding obligations of Seller
and the Company, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to or limiting creditors' rights or by legal principles of general applicability
governing availability of equitable remedies.
Section 2.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Seller and the
Company do not, and the performance of this Agreement by Seller and the Company
will not (i) conflict with or violate the articles of incorporation, bylaws, or
other governing documents of the Company, (ii) to the knowledge of Seller,
conflict with or violate any laws, statutes, rules, regulations, or
pronouncements of any court, tribunal, or governmental agency, whether federal,
state, or local, (collectively, "Laws") applicable to Seller or the Company, or
by which they or their respective assets are bound or affected, or (iii) result
in any material breach of or constitute a material default (or an event that
with notice or lapse of time or both would become a material default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the assets of Seller or the Company pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise, or other
instrument or obligation to which Seller or the Company is a party or by which
any of them or their respective assets are bound or affected.
(b) The execution and delivery of this Agreement by Seller and the
Company do not, and the performance of this Agreement by Seller and the Company
will not, require any consent, approval, authorization, or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign.
Section 2.06 COMPLIANCE; PERMITS. The Company is not in conflict with, or
in default under or violation of, (i) any federal, state, or local laws
applicable to the Company or by which the Company or any of the assets of the
Company are bound or affected or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company is a party or by which the Company or its assets
are bound or affected. The Company possesses all permits, licenses, leases,
agreements, and authorizations of governmental authorities and any other
applicable persons or entities necessary to or for the operation of its assets,
properties, and business, all of which permits, licenses, leases, agreements,
and authorizations are in full force and effect.
Section 2.07 REPORTS AND FINANCIAL STATEMENTS OF THE COMPANY. The balance
sheet and statement of income for calendar year 1998, the preliminary audited
balance sheet for the period ending as of September 30, 1999 (the "Preliminary
Audited Balance Sheet"), and the preliminary audited income statement for the
period ending as of September 30, 1999, copies of all of which are
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STOCK PURCHASE AGREEMENT PAGE 4
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attached hereto as EXHIBIT C (collectively, the "Financial Statements"), are
true and complete in all material respects, fairly represent the financial
position and results of operations of the Company as of and for the periods
shown, and, in the instance of the 1998 financial statements were prepared in
accordance with reasonable accounting principles and practices, consistently
applied, and, in the instance of the September 30, 1999 financial statements
were prepared in accordance with generally accepted accounting principles. None
of the Financial Statements contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements therein
not misleading.
Except as and to the extent of (i) liabilities reflected or reserved
against in the Preliminary Audited Balance Sheet and (ii) liabilities which have
arisen since the date of the Preliminary Audited Balance Sheet in the ordinary
course of business and which have been fully disclosed to Purchaser in writing,
the Company does not have any liabilities or obligations (whether accrued,
absolute or contingent), and including without limitation, any liabilities
resulting from failure to comply with any laws or any federal, state, or local
tax liabilities due or to become due whether (a) incurred in respect of or
measured by income for any financial statement or balance sheet period, or (b)
arising out of transactions entered into, or any state of facts existing, prior
or subsequent thereto.
Section 2.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30,
1999, except as shown on attached SCHEDULE 2.08 or as expressly permitted or
authorized by this Agreement, the Company has conducted its businesses only in
the ordinary course and in a manner consistent with past practice and, since
such date, except as shown on SCHEDULE 2.08, there has not been (a) any material
adverse change in the financial condition, results of operations, or business of
the Company, (b) any material damage, destruction, or loss (whether or not
covered by insurance) with respect to any assets of the Company, (c) any change
by the Company in its accounting methods, principles, or practices, (d) any
entry by the Company into any commitments or transactions material to the
Company, (e) any declaration, setting aside, or payment of any dividends or
distributions in respect of shares of the Stock or any redemption, purchase, or
other acquisition of any of the capital stock of the Company, (f) any increase
or decrease in or establishment or termination of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase, or other employee benefit plan of the Company, or any other increase
in the compensation payable or to become payable to any officers or key
employees of the Company, (g) any proposed law or regulation or any actual event
or condition of any character that is known to the Seller or the Company that
materially adversely affects the business or future prospects of the Company,
(h) any claim, litigation, event, or condition of any character that materially
adversely affects the business or future prospects of the Company, (i) any
issuance or purchase of, or agreement to issue or purchase shares of the capital
stock or other securities of the Company, (j) any mortgage, pledge, lien, or
encumbrance made or agreed to be made on any of the Company's assets or
properties, (k) any sale, transfer, other disposition of, or agreement to sell,
transfer, or dispose of the Company's properties or assets, tangible or
intangible, except as expressly permitted by this Agreement and except in the
ordinary course of business and then only for full and fair value received, (l)
any loans, advances, or agreements with respect to any
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STOCK PURCHASE AGREEMENT PAGE 5
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loans or advances, other than to customers in the ordinary course of business
and that have been properly reflected as "accounts receivable" on the Company's
books; (m) any transaction outside the ordinary course of business, (n) any
capital expenditure by the Company in excess of $15,000, or (o) any agreement by
Seller or the Company to do any of the items described in Subparagraphs (a)
through (n) above.
For purposes of this Agreement, the terms "material" and "materiality" are
defined to consist and include only of those items or events which either
individually have a value in excess of $15,000 or collectively have a value in
excess of $50,000.
As used in this Agreement, the term "material adverse change" means any
change, event, circumstance, or condition (collectively, a "Change") which
negatively impacts the ownership, operation, or value of the Company and which,
when taken separately or considered with all other Changes, would exceed the
above specified thresholds for materiality.
Section 2.09 ABSENCE OF LITIGATION. Except as disclosed on SCHEDULE 2.21,
there are no claims, actions, proceedings, or investigations pending or, to the
knowledge of Seller or the Company, threatened against the Company or any of the
assets of the Company before any court, arbitrator, or administrative,
governmental, or regulatory authority or body, domestic or foreign. As of the
date hereof, neither the Company nor its assets are subject to any order, writ,
judgment, injunction, decree, determination, or award.
Section 2.10 EMPLOYEE BENEFIT PLANS. Except as set forth on attached
SCHEDULE 2.10 (collectively, the "Plans"), the Company does not have any
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended and the regulations thereunder), any
bonus, stock option, stock purchase, restricted stock, incentive, deferred
compensation, medical, accident, life insurance, disability income, retiree
medical or life insurance, supplemental retirement, severance, and other benefit
plans, programs, or arrangements, or any sick leave and vacation plans. The
Company has operated the Plans in compliance with all applicable federal, state,
and local laws and regulations, has received no notice of any claims or
violations of any laws and regulations applicable to the Plans, and, has no
existing obligations or liabilities under the Plans which have not been fully
funded or reserved for on the Financial Statements. Any and all such plans,
programs, and arrangements previously adopted and subsequently terminated by the
Company were duly and validly terminated in accordance with all applicable laws
and the Company has no continuing obligations or liabilities and has received no
notice of any claims or violations with respect to such former plans, programs,
and arrangements.
Section 2.11 TITLE TO STOCK. Seller owns good and marketable title to all
of the Stock, free and clear of liens, claims, and encumbrances of any kind or
character.
Section 2.12 ASSETS OF THE COMPANY.
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(a) SCHEDULE 2.12(a) attached hereto contains a complete and correct
description of all real property owned by or leased to the Company or in which
the Company otherwise holds contractual rights (collectively, the "Company Real
Estate"), together with all applicable real property leases and contracts. All
such leases and contracts are valid and in full force and effect and all rents,
royalties, and other sums payable by the Company thereunder have been timely
paid. There exists no default or event or circumstance which, with notice or
lapse of time or both, will constitute a default under any of such lease
agreements.
(b) SCHEDULE 2.12(b) attached hereto contains a complete and accurate
description of all vehicles, equipment, furniture, fixtures, and other personal
property of any kind or character, tangible or intangible, that is owned by, in
the possession of, or used by the Company in connection with the Company's
business. Except as shown on SCHEDULE 2.12(b), no personal property owned or
used by the Company in connection with its business is held under any lease,
security agreement, conditional sales contract, or other title retention or
financing agreement or is located any place other than in the possession of the
Company.
Section 2.13 TITLE TO ASSETS. The Company has, or will have at Closing,
good and marketable title to all of its assets and properties, real and
personal, tangible and intangible, that are material to the Company's business
and future prospects, free and clear of liens, claims, charges, and encumbrances
of any kind or nature, save and except (a) the liens and security interests
shown on attached SCHEDULE 2.13, (b) liens for real and personal property taxes
that are not yet due and payable and (c) possible minor matters that, in the
aggregate, are not substantial in amount and do not materially interfere with or
detract from the present or intended use of any of the assets and properties nor
materially impair the business operations of the Company.
Section 2.14 TAXES. The Company is and at all times in the past has been a
"C" corporation within the meaning of Section 1362 of the Internal Revenue Code
of 1986, as amended. The Company presently maintains and at all times in the
past has maintained a fiscal year ending as of December 31 for federal income
tax purposes. The Company has filed all state and federal Tax Returns (defined
below) required to be filed by them, and the Company has paid and discharged all
Taxes (as defined below) shown due thereon and have paid all other Taxes as are
due. The liability for Taxes set forth in each such Tax Return does not
materially understate the Taxes required to be reflected on such Tax Return. For
purposes of this Agreement, "Tax" or "Taxes" means taxes of any kind, payable to
any federal, state, local, or foreign taxing authority, including (without
limitation) (i) income, franchise, profits, gross receipts, ad valorem, value
added, sales, use, service, real or personal property, payroll, withholding,
employment, social security, unemployment compensation, and production taxes,
and (ii) interest, penalties, and additions to tax imposed with respect thereto,
whether disputed or not; and "Tax Returns" means all returns, reports,
declarations, claims for refund, and information statements with respect to
Taxes required to be filed with the Internal Revenue Service or any other taxing
authority, domestic or foreign, through the time of Closing hereunder,
including, without limitation, consolidated, combined, and unitary tax returns
and any schedule or amendment thereto. The Company has not (i) granted any
waiver of any statute of limitations with respect to, any Tax, or (ii) obtained
an extension of time with respect to the filing
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STOCK PURCHASE AGREEMENT PAGE 7
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of any Tax Return other than Tax Returns that were duly filed within the
applicable extension period. No claim has been made by an authority in a
jurisdiction where the Company does not file Tax Returns that the Company may be
subject to taxation by that jurisdiction. There are no liens or security
interests on any of the assets of the Company that arose in connection with any
failure (or alleged failure) to pay any Tax. The Company has disclosed on all
federal income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Section
6662 of the Code. The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third-party. There is no dispute or
claim concerning any liability for Tax of the Company (i) claimed or raised by
any authority in writing or (ii) as to which the Company or any officers (and
employees responsible for Tax matters) of the Company have knowledge.
Section 2.15 ENVIRONMENTAL MATTERS.
(a) The Company has conducted all operations and activities in
material compliance with all applicable Environmental Laws (as defined below),
and none of the assets of the Company is being or has been operated in violation
of any Environmental Laws.
(b) The Company possesses all permits required under Environmental
Laws for the operation of its assets.
(c) The assets of the Company, and the operations conducted thereon or
therewith, are not subject to any existing, unfulfilled administrative or
judicial order requiring remedial action under any Environmental Law.
(d) Neither Seller nor the Company has received any notice of any
investigation or inquiry regarding failure of the assets of the Company, or the
operations conducted thereon or therewith, to comply with Environmental Laws.
As used in this Section 2.15, "Environmental Laws" shall mean the federal
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, the Superfund Amendments and Reauthorization Act, as amended, Safe
Drinking Water Act, Texas Solid Waste Disposal Act, the Resource Conservation
and Recovery Act, as amended, the Hazardous and Solid Waste Amendments Act, as
amended, the Toxic Substances Control Act, as amended, the Clean Water Act, as
amended, and the Clean Air Act, as amended, and any other applicable federal,
state, or local environmental law and all rules, regulations and administrative
orders related thereto, as such laws, rules, regulations and administrative
orders exist as of the Closing Date.
Section 2.16 BROKERS. No broker, finder, or investment banker is entitled
to any brokerage, finder's, or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller or the Company.
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Section 2.17 CONTRACTS. Attached hereto as SCHEDULE 2.17 is a list of all
currently effective agreements respecting property, goods, and/or services of or
binding upon the Company or its assets (the "Contracts"). None of the Contracts
has been modified, amended, supplemented or altered except as specifically shown
on attached SCHEDULE 2.17. The Company has made copies of all of the Contracts
(including all modifications, amendments, and supplements thereto) available to
Purchaser. All of the Contracts are in full force and effect and the Company is
not in default under any of the Contracts.
Section 2.18 NO UNION CONTRACTS. There is no collective bargaining or other
union agreement to or by which the Company is a party or is bound, nor is a
collective-bargaining agreement currently being negotiated; and all non-exempt
employees have been paid in accordance with the Fair Labor Standards Act of 1938
and the Portal-to-Portal Act of 1947. The Company is in compliance with all
federal, state, or other applicable laws, domestic or foreign, respecting
employment and employment practices, terms and conditions of employment, and
wages and hours, and has not and is not engaged in any unfair labor practice.
The Company has not experienced any material labor difficulty during the last
three years.
Section 2.19 INSURANCE. SCHEDULE 2.19 attached hereto lists all insurance
policies (the "Insurance Policies") held by the Company and all such listed
policies are in the respective principal amounts set forth therein. The Company
maintains (a) insurance on all of its business, operations, and assets of a type
customarily insured, covering property damage and loss of income by fire or
other casualty and (b) insurance protection against all liabilities, claims, and
risks against which it is customary to insure. All premiums due and payable
under the Insurance Policies have been paid. The Company is not, and but for a
requirement that notice be given or that a period of time elapse or both would
not be, in violation under any such Insurance Policies.
Schedule 2.20 BANK ACCOUNTS. SCHEDULE 2.20 attached hereto contains a true
and correct list of the names and addresses of all banks, financial
institutions, and other depositories in which the Company has an account,
deposit, or safe deposit box and the names of all persons authorized to draw on
those accounts or deposits or who have access to them and the account numbers of
each account.
Schedule 2.21 OTHER LIABILITIES AND OBLIGATIONS. SCHEDULE 2.21 attached
hereto contains a true and correct list of all liabilities and obligations of
the Company not disclosed elsewhere in this Agreement of any kind, character,
and description, whether accrued, absolute, contingent, or otherwise, and
whether or not required to be disclosed or accrued in the financial statements
of the Company, that exceed $5,000 to any one creditor. In the case of
liabilities that may not be fixed, an estimate of the maximum amount that may be
payable is also included.
Section 2.22 DISCLOSURE. No representations or warranties made by Seller or
the Company in this Agreement, and no statements of Seller or the Company
contained in any document executed or delivered by any of them to Purchaser
pursuant hereto or in connection with the
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STOCK PURCHASE AGREEMENT PAGE 9
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transactions contemplated hereby, contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements herein
or therein not misleading.
Section 2.23 TRANSACTIONS WITH AFFILIATES. Except as shown on attached
SCHEDULE 2.23, the Company is not a party to any transaction, contract, or
agreement with any (i) current or former officer or director of the Company or
(ii) any parent, spouse, child, brother, sister or other family relation of any
such officer or director, or (iii) any corporation or partnership of which any
such officer or director or any such family relation is an officer, director,
partner or greater than 10% stockholder (based on percentage ownership of voting
stock) or (iv) any "affiliate", or "associate" of any such persons or entities
(as such terms are defined in the rules and regulations promulgated under the
Securities Act of 1934), including, without limitation, any transaction
involving a contract, agreement, or other arrangement providing for the
employment of, furnishing of materials, products, or services by, rental of real
or personal property from, or otherwise requiring payments to, any such person
or entity, except with respect to services provided on reasonable terms which
would not materially alter the presentation of the Financial Statements, if such
transactions had been entered into with an unrelated third party.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as of the date of this
Agreement as follows:
Section 3.01 ORGANIZATION AND QUALIFICATION. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware. Purchaser is duly qualified or licensed to do business and is in good
standing in each jurisdiction where the character of the assets owned or
operated by Purchaser or the nature of its activities makes such qualification
or licensing necessary.
Section 3.02 AUTHORITY RELATIVE TO THIS AGREEMENT. Purchaser has the
requisite corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Purchaser
and the consummation by Purchaser of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Purchaser are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Purchaser and, assuming the due
authorization, execution and delivery by all other parties hereto, constitutes
the legal, valid and binding obligation of Purchaser, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect relating to or limiting creditors, rights or by legal
principles of general applicability governing the availability of equitable
remedies.
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Section 3.03 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Purchaser do not,
and the performance of this Agreement by Purchaser will not (i) conflict with or
violate the certificate of incorporation or bylaws of Purchaser, (ii) conflict
with or violate any law applicable to Purchaser or by which any of its assets
are bound or affected or (iii) result in any breach or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the material assets of Purchaser pursuant to, any note, bond, mortgage,
indenture, or any material contract, agreement, lease, license, permit,
franchise, or other instrument or obligation to which Purchaser is a party or by
which Purchaser or any of its assets are bound or affected.
(b) The execution and delivery of this Agreement by Purchaser do not,
and the performance of this Agreement by Purchaser will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign.
Section 3.04 BROKERS. No broker, finder, or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Purchaser.
ARTICLE IV
CONDUCT OF BUSINESS OF THE COMPANY
PENDING THE CLOSING DATE
Pending the Closing Date or earlier termination of this Agreement, and
except as otherwise specifically contemplated in this Agreement or the schedules
hereto or as may be consented to and approved in writing by Purchaser, the
Company covenants and agrees as follows:
Section 4.01 ORDINARY COURSE OF BUSINESS. The Company will carry on its
business substantially in the same manner as heretofore conducted, and will not
engage in any transaction or activity, enter into any agreement or make any
commitment, except in the ordinary course of business. Without limiting the
generality of the foregoing, the Company will:
(a) operate and maintain its assets diligently and in a good and
workmanlike manner and comply in all material respects with all applicable laws
and with the terms of any agreements binding upon those assets;
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(b) maintain and keep in full force and effect all of the Contracts
and all permits, licenses and similar rights and privileges of the Company and
each subsidiary of the Company and comply in all material respects with all of
its material obligations therein and thereunder;
(c) maintain all of its tangible assets in at least as good a
condition as they were in at the date hereof, ordinary wear and tear excepted,
and remove no material items therefrom;
(d) maintain the Insurance Policies in full force and effect; and
(e) pay, perform, and discharge, on a basis consistent with the
Company's prior practices, all obligations of the Company under the notes,
leases, and other instruments evidencing the indebtedness or other liabilities
of the Company which are shown on the Preliminary Audited Balance Sheet and/or
on the schedules attached to this Agreement in accordance with their respective
terms (but without right of prepayment);
Section 4.02 RESTRICTED ACTIONS. Except as otherwise expressly provided in
this Agreement, the Company will not, without the prior written consent of
Purchaser, which consent shall not be unreasonably withheld, (a) enter into any
agreement or commitment, the result of which would be to incur or expand the
existing indebtedness or liabilities of the Company; (b) incur any additional
indebtedness other than trade payables incurred in the ordinary course of
business; (c) sell, transfer, assign, convey or otherwise dispose of any of the
assets of the Company other than dispositions of (i) equipment or other personal
property which is replaced with property and equipment of comparable or better
value and utility in the ordinary and routine maintenance and operation of its
business and (ii) personal property and equipment no longer used or useful in
the ordinary course of business; or (d) create or permit the creation of any new
lien, security interest, or other encumbrances on any asset of the Company.
Section 4.03 AMENDMENTS TO GOVERNING DOCUMENTS. No change or amendment
shall be made in the articles of incorporation or bylaws of the Company.
Section 4.04 ORGANIZATION. The Company will preserve its corporate
existence and will keep its business organization intact and use its reasonable
efforts to preserve its relationships with its suppliers, customers, and others
having business relations with the Company.
Section 4.05 EMPLOYMENT AGREEMENTS. The Company will not enter into any
agreement relating to employment with any person.
Section 4.06 ISSUANCE OF SHARES; DIVIDENDS. The Company will not issue
shares of capital stock, or grant any options, warrants or other rights to
purchase or acquire the capital stock of the Company. The Company will neither
declare nor pay or set aside for payment any dividend or other distribution on
its outstanding shares of capital stock, nor redeem, purchase or otherwise
acquire any of its capital stock.
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Section 4.07 NO DEFAULT. The Company will not knowingly take any action or
knowingly take any action that causes a material breach of any representation,
warranty, covenant or agreement of the Company under this Agreement.
Section 4.08 INVESTMENT. The Company will not make any new capital
investment in, make any loan to, or acquire the securities or assets of any
other person or entity.
Section 4.09 USES OF CASH. Other than in the ordinary course of business,
the Company will not make any payments during the period between the date hereof
and the Closing Date except for the purpose of paying Taxes, paying rentals or
other sums owing by the Company under the Contracts as and when due, discharging
rentals and trade payables incurred in the ordinary course of business, and
retiring or discharging presently existing indebtedness to financial
institutions or other third parties as and when due in accordance with the terms
of the notes or other instruments evidencing such indebtedness (but without
right of prepayment).
ARTICLE V
OTHER AGREEMENTS OF THE PARTIES
Section 5.01 ENVIRONMENTAL REPORT. Within fifteen (15) days from the date
of this Agreement, Seller and the Company, at the Company's expense, shall
furnish to Purchaser a Phase I environmental study and report covering all of
the Company Real Estate and prepared by an environmental consulting firm
mutually acceptable to Seller and Purchaser (the "Environmental Report"). If the
Environmental Report shows any environmental condition that is unacceptable to
Purchaser, Purchaser shall, within ten (10) days of its receipt of the
Environmental Report, notify Seller of such condition(s) and the reasons for
Purchaser's objections thereto ("Purchaser's Environmental Objections"). Upon
expiration of such ten-day notification period, Purchaser shall be deemed to
have accepted the form and substance of the Environmental Report, except,
however, those matters to which Purchaser has timely objected in accordance with
the preceding sentence. Seller shall have no obligation to bring any action or
proceeding or otherwise to incur any expense whatsoever to eliminate or modify
any of Purchaser's Environmental Objections. Within five days following receipt
of Purchaser's Environmental Objections, Seller shall give notice to Purchaser
of what actions, if any, that Seller proposes to take in order to cure
Purchaser's Environmental Objections. If Seller is unable or unwilling to remedy
Purchaser's Environmental Objections to the reasonable satisfaction of
Purchaser, Purchaser may terminate this Agreement by notice in writing to Seller
by the earliest to occur of (i) the Closing Date or (ii) five (5) business days
following notice from Seller that it is unable or unwilling to remedy
Purchaser's Environmental Objections, in which event, except as expressly
provided otherwise in this Agreement, none of the parties hereto shall have any
further rights or obligations under this Agreement. If this Agreement is
terminated for any reason, Purchaser agrees to immediately return the Current
Environmental Report to the Company and to hold the contents thereof strictly
confidential. Likewise, pending and following Closing
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STOCK PURCHASE AGREEMENT PAGE 13
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hereunder, Seller, shall hold the Current Environmental Report strictly
confidential and shall not disclose the same or its contents to any third party
without the prior written consent of Purchaser.
Section 5.02 PURCHASER'S RIGHTS OF INSPECTION. Pending Closing hereunder,
Purchaser shall have the right to inspect, review, and audit the assets of the
Company and all books, records, data, and other information of Seller and the
Company relating to the business and financial affairs of the Company, the title
to and ownership of the assets of the Company, and the conduct of the Business.
Except as otherwise expressly provided in this Agreement, all expenses incurred
by the Purchaser relating to its inspections, reviews, and audits shall be borne
and paid exclusively by the Purchaser. Seller and the Company shall cooperate
with Purchaser in all reasonable respects in facilitating such inspections,
reviews, and audits. Without limiting the foregoing, Seller and the Company
agree that, pending Closing, they will (a) provide or cause to be provided to
Purchaser and its counsel, accountants, consultants, and other authorized
representatives, during normal business hours or otherwise, if necessary, full
access to all of their, assets, books, agreements, commitments and records; and
(b) furnish Purchaser and its representatives with such data, records, and other
information concerning any of their operations and affairs as Purchaser may
reasonably request.
Seller further agrees that, upon request by Purchaser following Closing, he
will execute and deliver to Purchaser or its accountants such audit response
letters and further confirmations as Purchaser or its accountants may reasonably
require for purposes of verification of the accuracy, validity, and completeness
of all financial and other information provided or made available by Seller and
the Company to Purchaser in connection with the transactions contemplated by
this Agreement.
Section 5.03 EXCLUSIVE DEALING. Unless and until this Agreement shall have
been terminated in accordance with the terms hereof, neither Seller nor the
Company shall directly or indirectly, solicit, initiate, or participate in
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than the Purchaser or an affiliate or an
associate of the Purchaser) concerning, or enter into any agreement providing
for any sale of the assets of the Company, any sale of shares of capital stock
in the Company, or any similar transactions involving the Company.
Section 5.04 CONSENTS, APPROVALS, AND FILINGS. Seller, the Company, and
Purchaser shall each use its reasonable efforts to obtain at the earliest
practicable date and, in any event, prior to the Closing Date, all consents and
approvals, including any third party consents, and to make all filings required
to be obtained or made under any federal, state, or local laws or any agreement
or other instrument (including, without limitation, any consent or approval
necessary to avoid the loss of any rights under any agreement) prior to
consummating the transactions contemplated hereby, whether such consent,
approval or filing is to be obtained from or made with private parties or
applicable governmental authorities.
Section 5.05 BROKERS AND FINDERS. Purchaser, on the one hand, and Seller
and the Company, on the other hand, shall indemnify each other and hold each
other harmless from any
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STOCK PURCHASE AGREEMENT PAGE 14
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claim against the other for a broker's or finder's fee, commission, or other
like payment in connection with the transactions contemplated by this Agreement
which arises from or is based upon arrangements made by or through the
indemnifying party.
Section 5.06 PUBLIC ANNOUNCEMENTS. Pending Closing, except as may be
required by applicable law, no party hereto shall issue any press release or
make any other public pronouncements concerning this Agreement or the
transactions contemplated hereby without the written consent and approval of all
other parties.
Section 5.07 RESIGNATION OF OFFICERS AND DIRECTORS. Seller and the Company
will secure the resignation of each then-serving officer and director of the
Company effective as of the Closing Date.
Section 5.08 NOTICE OF DEVELOPMENTS. Prior to the Closing, Seller and the
Company will give prompt notice to Purchaser of any material event affecting the
assets, liabilities, business, financial condition, operations, results of
operations, or future prospects of the Company. No disclosure pursuant to this
Section 5.08 shall, however, be deemed to amend or supplement this Agreement or
the schedules hereto or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant under this Agreement.
Section 5.09 PRELIMINARY AND FINAL COMPUTATIONS OF NFA. As part of its
diligence processes in this transaction, Sierra intends to have the books and
records of the Company audited by certified professional accountants and to have
audited financial statements prepared for the Company in compliance with
generally accepted accounting principles ("GAAP"). Prior to Closing, Seller and
Purchaser shall have their respective accounting groups perform audit work of
the Company, with each to bear its own accounting and other expenses incident
thereto. If there is a difference in the financial statements, the parties will
try to reconcile the differences prior to Closing, it being recognized that the
financial data necessary to permit a final computation of NFA may not be
available at such time. The parties accordingly agree to estimate NFA at Closing
utilizing the audit opinions of both accounting groups and to finalize their
calculation of NFA on a post-Closing basis within sixty (60) days following the
Closing. At least three (3) business days prior to the Closing, Purchaser shall
deliver to Seller, and Seller shall deliver to Purchaser, a preliminary
settlement statement, reflecting their good faith estimates of NFA as of the
Closing Date based upon the best information then available to them. Upon
receipt of these preliminary settlement statements, Seller and Purchaser shall
attempt to reconcile any differences they may have regarding the same. If there
are any items the parties are unable to reconcile prior to Closing, Purchaser's
position shall prevail to enable Closing to proceed, but without prejudice to
the right of either party to dispute any item of the final settlement statement.
Within forty-five (45) days after the Closing Date, Purchaser shall deliver to
Seller an audited balance sheet of the Company for the period ended as of the
Closing Date, prepared in accordance with GAAP, and a proposed final settlement
statement including Purchaser's final computation of NFA. Seller shall have ten
(10) days from its receipt of the such balance sheet and proposed settlement
statement to notify Purchaser of its objections, if any, to the information set
forth therein, including the opportunity of Seller to have independent auditing
or to
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STOCK PURCHASE AGREEMENT PAGE 15
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employ the Company's auditors to prepare a final computation of NFA on behalf of
Seller. If Seller fails to timely notify Purchaser of any such objections,
Seller shall be deemed to have irrevocably accepted the computations and
substance of such balance sheet and proposed final settlement statement for all
purposes of this Agreement. If Seller timely and properly contests any items
within such balance sheet or proposed final settlement statement, Seller and
Purchaser shall promptly meet and utilize their best efforts to resolve their
differences, it being the intention of the parties to finalize all post-Closing
adjustments within sixty (60) days following the Closing Date. If the parties
are unable to reach final agreement on any such post-Closing matters, they shall
resolve their differences by means of the dispute resolution procedures set
forth in Section 10.03 and final settlement between the parties shall be
deferred pending conclusion of such procedures. At the conclusion of the
post-Closing accounting contemplated by this Section 5.09, Seller or Purchaser,
as appropriate, shall immediately remit to the other, in immediately available
funds, the net sum determined owning by such party in the final settlement
statement, whether finalized by agreement of the parties or through dispute
resolution processes. As used in this Agreement, "Final Balance Sheet" and
"Final Settlement Statement" shall mean the final balance sheet and the final
settlement statement proposed by Purchaser, as the same may be modified either
by agreement of the parties or dispute resolution pursuant to the foregoing.
Section 5.10 RECEIVABLES. Seller expressly represents and warrants that all
notes receivable and accounts receivable of the Company reflected on the Final
Balance Sheet as of the Closing Date are collectible in the normal course of
business within 150 days from the Closing Date without resort to litigation or
the retention of collection services. Following Closing, the Company shall apply
partial payments by customers to the respective outstanding receivables of such
customers in the order of their aging (i.e. older accounts paid first). To the
extent any such receivables remain unpaid following such 150-day period, the
Company, as its exclusive remedies therefor, may require Seller to immediately
purchase the same from the Company at full face value and without subsequent
recourse of any kind upon the Company or Purchaser or may offset the face amount
of such unpaid receivables against its payment obligations under the Note (in
return for assignment of such receivables to Seller without recourse upon
Purchaser).
Section 5.11 TAXES AND TAX RETURNS. Seller shall be responsible for the
timely preparation and filing (without extension, unless otherwise agreed by
Purchaser in writing) of all federal, state, and local Tax Returns covering or
for (or based upon income received or realized during) all periods prior to and
including the Closing Date, except that, if Closing occurs, Purchaser shall be
responsible for the timely preparation and filing of the federal income tax
returns of the Company for calendar year 2000 and ensuing years and the Texas
state franchise tax returns of the Company due on or before May 15, 2001 and
ensuing years. Seller shall prepare all such Tax Returns for which Seller is
responsible in accordance with applicable law and shall submit such Tax Returns
to the Company and Purchaser for their review and concurrence at least ten (10)
business days prior to filing. If, after the Closing Date, any applicable taxing
authority shall determine there to be a deficiency in the amount of any federal,
state, or local Tax paid or payable by the Company which is not reserved for or
reflected on the Final Balance Sheet and which relates to any period prior to
the Closing Date, Seller shall be fully responsible for the payment of any such
deficiency.
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Following Closing, if any Tax Return covering a period of time prior to the
Closing Date shall be audited by an applicable taxing authority, the Company
shall promptly notify Seller of such audit. Seller and Purchaser and the Company
shall jointly conduct all discussions and negotiations with applicable taxing
authorities regarding each such audited Tax Return as it may relate to periods
prior to the Closing Date and any decision to compromise, settle, or pay a
disputed matter under any such audited Tax Return shall require joint approval
of Seller and Purchaser and the Company, which rights of negotiation and
approval shall in all events between the parties be exercised in good faith. The
Company shall have exclusive authority to conduct all discussions and
negotiations with applicable taxing authorities regarding Tax Returns relating
to periods from and after the Closing Date and shall be solely responsible for
the payment of all Taxes attributable to such periods.
Section 5.12 REIMBURSEMENT FOR CERTAIN VEHICLE PURCHASES. If this
transaction closes, Purchaser agrees to pay to Seller at Closing an amount equal
to the purchase price of the vehicles described on attached SCHEDULE 5.12, as
purchased by the Company during the pendency of negotiations on this
transaction, together with the purchase price of any other vehicles or other
capital goods or items acquired by the Company pending Closing and for which
Purchaser may agree in advance to reimburse Seller in writing at the Closing.
Section 5.13 EMPLOYMENT MATTERS. To the extent Purchaser or the Company
shall elect to continue the employment of current employees of the Company
following Closing, each employee so retained by Purchaser or the Company
following Closing shall be eligible for participation in Purchaser's current
employee benefit programs with full credit for length of service prior to
Closing with the Company. Seller and the Company acknowledge and agree that the
decision to hire any current employees of the Company is solely in the
discretion of Purchaser and that Purchaser has no obligation of any kind to
employ any of the existing employees of the Company following Closing.
Section 5.14 INDEMNIFICATION.
(a) Indemnification by Seller. Seller agrees to indemnify and hold
harmless Purchaser and the Company after the Closing Date against and in respect
of any of the following matters which may be asserted or established:
(i) All liabilities of the Company of any nature, whether
accrued, absolute, contingent, or otherwise, which existed as of the
Closing Date and are not provided for or reflected in the Final Balance
Sheet;
(ii) Any and all damages, losses, expenses, or deficiencies
resulting from any breach of the warranties, representations and covenants
of Seller and the Company contained herein or in any schedule hereto; and
(iii) All demands, assessments, judgments, costs, and expenses
(including reasonable legal fees and other expenses of litigation, both at
the trial and appellate level)
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STOCK PURCHASE AGREEMENT PAGE 17
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arising from or in connection with any action, suit, proceeding, or claim
incident to any of the foregoing.
(b) Indemnification by Purchaser. Purchaser agrees to indemnify and
hold harmless Seller after the Closing Date against or in respect of any of the
following matters:
(i) Any and all damages, losses, expenses, or deficiencies
resulting from any breach of the warranties, representations and covenants
of Purchaser contained herein or in any schedule hereto; and
(ii) All demands, assessments, judgments, costs, and expenses
(including reasonable legal fees and other expenses of litigation, both at
the trial and appellate level) arising from or in connection with any
action, suit, proceeding, or claim incident to any of the foregoing.
Section 5.15 RELEASE AND WAIVER BY SELLER. Any provisions of this Agreement
to the contrary notwithstanding, following Closing hereunder, Seller shall have
no right of contribution, indemnity, reimbursement, or other legal or equitable
right of recourse upon the Company based upon or attributable to the breach or
non-performance by Seller or the Company of any of their jointly made
representations, warranties, and covenants under this Agreement, and Seller, as
of Closing hereunder, expressly releases and waives any and all such rights of
contribution, indemnity, reimbursement or other recourse upon or against the
Company.
Section 5.16 INVESTMENT REPRESENTATIONS BY SELLERS. Upon Closing and in
connection with any conversion of the unpaid balance of the Note into common
stock in Purchaser as more particularly provided in the Note, Seller expressly
represents, warrants, acknowledges, and agrees to and with the Company that:
(a) any such stock so acquired by Seller (the "Stock") may not have
been registered under the Securities Act of 1933 or any other
state securities laws (collectively, the "Securities Acts")
because Purchaser may or will issue the Stock in reliance upon
this Section 5.16 and the exemptions from the registration
requirements of the Securities Acts providing for issuance of
securities not involving a public offering;
(b) Seller will acquire any Stock for Seller's own account, for
investment, and not with a view to the resale or distribution
thereof;
(c) Seller will not transfer, sell or offer for sale any portion of
the Stock unless there is an effective registration or other
qualification relating thereto under the Securities Act of 1933
and under any applicable state securities laws or unless the
holder of the Stock delivers to Purchaser an opinion of counsel,
satisfactory to Purchaser, that such registration or other
qualification under
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STOCK PURCHASE AGREEMENT PAGE 18
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such Act and applicable state securities laws is not required in
connection with such transfer, offer or sale;
(d) Purchaser is under no obligation to register the Stock or to
assist Seller in complying with any exemption from registration
under the Acts if Seller should at a later date wish to dispose
of the Stock;
(e) Prior to entering into this Agreement, Seller has made an
investigation of Purchaser and its business and has obtained or
had made available to Seller all information with respect thereto
which Seller needed to make an informed decision to structure the
transactions contemplated hereby as provided in this Agreement;
(f) Seller possesses adequate experience and sophistication as
investors for the evaluation of the merits and risks of
investment in the Stock; and
(g) Seller is an "accredited investor," as defined in Regulation D as
promulgated under the Securities Act of 1933, as amended, (the
"1933 Act").
Section 5.17 INVESTMENT REPRESENTATIONS BY PURCHASER. Purchaser
acknowledges that the Company is a privately owned corporation, that the Stock
has not been registered under the Securities Acts, and that the Stock cannot,
therefore, be offered for sale, sold, transferred, pledged, or otherwise
hypothecated except in accordance with the registration requirements of the
Securities Acts (or any applicable exemptions from such requirements). Purchaser
further acknowledges that Seller and the Company have made available to it such
information and documents as Purchaser has deemed necessary to enter into this
Agreement, that Purchaser understands the risks associated with ownership of the
Stock, and that Purchaser is capable of bearing the financial risks associated
therewith.
Section 5.18 DISCLAIMER BY PURCHASERS. PURCHASER ACKNOWLEDGES THAT PRIOR TO
CLOSING HEREUNDER PURCHASER WILL HAVE CONDUCTED SUCH EXAMINATIONS AND
INSPECTIONS OF THE TANGIBLE ASSETS OF THE COMPANY AS PURCHASER DEEMS NECESSARY
TO SATISFY ITSELF REGARDING THE CONDITION THEREOF AND THAT, BY CLOSING
HEREUNDER, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, PURCHASER
ACCEPTS ALL OF THE TANGIBLE ASSETS OF THE COMPANY ON AN "AS IS, WHERE IS" BASIS,
AND WITHOUT REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED OR STATUTORY, AS TO
CONDITION, MERCHANTABILITY, HABITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
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STOCK PURCHASE AGREEMENT PAGE 19
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ARTICLE VI
CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE
The obligation of Purchaser to close under this Agreement shall, unless
waived in writing by Purchaser, be subject to the satisfaction on or before the
Closing Date of each of the following conditions, and Seller and the Company
shall use their reasonable efforts to cause each such condition to be so
satisfied.
Section 6.01 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Seller and the Company contained in this Agreement shall be true
and correct in all respects as of the date of this Agreement and as of the
Closing Date, as though such representations and warranties were made at and as
of such date, except for changes expressly permitted or contemplated by this
Agreement.
Section 6.02 PERFORMANCE. Seller and the Company shall have performed and
complied with all covenants, agreements, obligations and conditions required by
this Agreement to be performed or complied with by them on or prior to the
Closing Date.
Section 6.03 CONSENTS. The consents, approvals, and filings described in
Section 5.03 shall have been obtained or made, as the case may be, without the
imposition of conditions or limitations having a material adverse effect.
Section 6.04 OPINION OF COUNSEL TO SELLER AND THE COMPANY. Seller and the
Company shall have delivered to Purchaser the opinion of their legal counsel,
Xxxxxxxx X. Xxxxx, in form and substance reasonably acceptable to Purchaser and
its counsel, 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 Texas; (ii) all outstanding shares of the Company have been validly
issued and are fully paid and non-assessable; and (iii) this Agreement has been
duly executed and validly delivered by, and is the legal, valid, and binding
obligation of Seller and the Company, and is enforceable against the Seller and
the Company in accordance with its terms, except as such enforceability may be
limited by (a) equitable principles of general applicability and (b) bankruptcy,
insolvency, reorganization, fraudulent conveyance, or similar laws affecting the
rights of creditors generally. In rendering this legal opinion, such counsel may
rely upon the certificates of public officials, of officers of the Company, or
the shareholders of the Company as to matters of fact.
Section 6.05 NO INJUNCTION. There shall not be in effect any preliminary or
permanent injunction or temporary restraining order issued by any state or
federal court that prevents the consummation of the transactions contemplated
hereby.
Section 6.06 OTHER DOCUMENTS. All documents required to be delivered to
Purchaser by Seller and the Company on or prior to the Closing Date shall have
been so delivered.
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Section 6.07 MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there
shall not have been any material adverse change in, to, or affecting the
Company, its operations, or its assets.
Section 6.08 CERTIFICATES. Seller and the Company shall have delivered to
Purchaser certificates confirming the continuing validity of their
representations and warranties pursuant to Section 6.01 and certifying their
performance hereunder as contemplated by Section 6.02.
Section 6.09 TITLE POLICY. Seller and the Company shall have delivered to
Purchaser, at their expense, an owner's policy or policies of title insurance
issued by a national title insurer insuring the title of the Company to the
Company Real Estate in respective amounts not less than the current ad valorem
tax valuations of each parcel comprising the same, free and clear of liens,
claims, and encumbrances other than liens for ad valorem taxes not yet due,
standard printed form exceptions, and any existing mineral reservations,
easements, and restrictions which are not such as to materially interfere with
or materially impair the current use, operation, or value of the Company Real
Estate.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF SELLER
AND THE COMPANY TO CLOSE
The obligations of Seller and the Company to consummate the transactions
contemplated by this Agreement shall, unless waived in writing by them, be
subject to the satisfaction on or before the Closing Date of each of the
following conditions, and Purchaser shall use its reasonable efforts to cause
each such condition to be so satisfied:
Section 7.01 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Purchaser contained in this Agreement shall be true and correct in
all respects as of the date made and as of the Closing Date, as though such
representations and warranties were made at and as of such date, except for
changes permitted or contemplated by this Agreement.
Section 7.02 PERFORMANCE. Purchaser shall have performed and complied in
all material respects with all covenants, agreements, obligations, and
conditions required by this Agreement to be performed or complied with by
Purchaser on or prior to the Closing Date.
Section 7.03 CONSENTS AND APPROVALS. The consents, approvals, and filings
described in Section 5.03 shall have been obtained or made, as the case may be,
without the imposition of conditions or limitations having a material adverse
effect.
Section 7.04 NO INJUNCTION. There shall not be in effect any preliminary or
permanent injunction or temporary restraining order issued by any state or
federal court that prevents the consummation of the transactions contemplated
hereby.
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Section 7.05 OTHER DOCUMENTS. All documents required to be delivered to
Seller or the Company by Purchaser on or prior to the Closing Date shall have
been so delivered.
Section 7.06 CERTIFICATES. Purchaser shall have delivered to Seller and the
Company certificates confirming the continuing validity of its representations
and warranties pursuant to Section 7.01 and certifying its performance hereunder
as contemplated by Section 7.02.
Section 7.07 OPINION OF COUNSEL TO PURCHASER. Purchaser shall have
delivered to Seller and the Company the opinion of its legal counsel, Xxxx &
Xxxx, L.L.P., in form and substance reasonably acceptable to Seller, the
Company, and their counsel, to the effect that (i) Purchaser has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Delaware; and (ii) this Agreement has been duly executed
and validly delivered by, and is the legal, valid, and binding obligation of
Purchaser, and is enforceable against Purchaser in accordance with its terms,
except as such enforceability may be limited by (a) equitable principles of
general applicability and (b) bankruptcy, insolvency, reorganization, fraudulent
conveyance, or similar laws affecting the rights of creditors generally. In
rendering this legal opinion, such counsel may rely upon the certificates of
public officials or of officers of Purchaser as to matters of fact.
ARTICLE VIII
THE CLOSING
Section 8.01 CLOSING. The closing ("Closing") of the transaction
contemplated hereby shall take place at the offices of Purchaser at 000 X. Xxx
Xxxxxx, Xxxxxxx, Xxxxx, on a business date of Purchaser's unilateral selection
within thirty (30) days following any successful completion by Purchaser of an
initial public offering of common stock in the Company through a recognized
national stock exchange (the "Sierra IPO"), but in no event later than April 28,
2000, or at such other place and time as the parties hereto might hereafter
mutually agree in writing. Such date or any alternative date so selected by the
parties is referred to in this Agreement as the "Closing Date." Purchaser shall
afford Seller and the Company at least ten (10) days prior written notice of its
desired Closing Date pursuant to the foregoing.
Section 8.02 DELIVERIES. At the Closing, the following shall occur:
(a) Seller shall endorse and deliver the certificate(s) evidencing the
Stock to Purchaser, free and clear of liens, claims, and encumbrances;
(b) Seller and the Company shall deliver to Purchaser their closing
certificates in compliance with the provisions of Section 6.08;
(c) Seller and the Company shall deliver, or cause to be delivered, to
Purchaser the legal opinion of their counsel, as specified in Section 6.04;
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STOCK PURCHASE AGREEMENT PAGE 22
23
(d) Seller and the Company shall deliver, or cause to be delivered, to
Purchaser the title policy or policies specified in Section 6.09 (or a
commitment acceptable to Purchaser for the title insurer to do so);
(e) Seller and Purchaser shall execute and deliver a non-competition
agreement which is substantially identical in form and substance to that
attached hereto as EXHIBIT D;
(f) The parties shall attempt to agree upon an estimate of NFA and
shall execute a preliminary closing statement as contemplated by Section 5.09;
(g) Purchaser shall deliver, or cause to be delivered, to Seller the
legal opinion of its counsel, as specified in Section 7.07;
(h) Purchaser shall pay to Seller by wire transfer the cash portion of
the Purchase Price payable at Closing pursuant to Section 1.03(1);
(i) Purchaser shall execute and deliver the Note to Seller;
(j) The Company and Seller shall execute and deliver the Security
Documents;
(k) Purchaser shall deliver to Seller its closing certificate in
compliance with the provisions of Section 7.06; and
(l) Seller and the Company shall execute such notifications to
depository institutions and such changes of authorized signatories upon the
accounts of the Company as Purchaser may reasonably request.
ARTICLE IX
TERMINATION AND ABANDONMENT
Section 9.01 Termination and Abandonment. This Agreement may be terminated
at any time prior to the Closing:
(a) by mutual agreement of all of the parties hereto;
(b) by Seller if Closing shall not have occurred on or prior to April
28, 2000, other than due to breach or non-performance by Seller hereunder;
(c) by Purchaser, if the conditions set forth in Article VI shall not
have been complied with and performed in any material respect and such
noncompliance or nonperformance
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STOCK PURCHASE AGREEMENT PAGE 23
24
shall not have been cured or eliminated (or by its nature cannot be cured or
eliminated) on or before the Closing Date;
(d) by Seller and the Company if the conditions set forth in Article
VII have not been complied with and performed in any material respect and such
noncompliance or nonperformance shall not have been cured or eliminated (or by
its nature cannot be cured or eliminated) on or before the Closing Date; or
(e) by either Purchaser or Seller and the Company, by written notice
to the other, if any action or proceeding shall have been instituted before any
court or other governmental body or, to the knowledge of the party giving such
notice, shall have been threatened formally in writing by any public authority
with requisite jurisdiction, to restrain or prohibit the transactions
contemplated by this Agreement or to subject one or more of the parties or their
directors or their officers to liability on the grounds that it or they have
breached any law or regulation or otherwise acted improperly in connection with
such transactions, and such action or proceeding shall not have been dismissed
or such written threat shall not have been withdrawn or rescinded on or before
the Closing Date.
Section 9.02 REMEDIES, RIGHTS AND OBLIGATIONS ON TERMINATION. If this
Agreement is terminated and abandoned as provided in this Article IX:
(a) Redelivery. Each party will redeliver all documents, work papers,
and other materials of any other party relating to the transactions contemplated
by this Agreement, whether obtained before or after the execution of this
Agreement, to the party furnishing the same, and all information received by any
party to this Agreement with respect to the business of any other party shall
not at any time be used for the advantage of, or disclosed to third parties by,
such party to the detriment of the party furnishing such information; provided,
however, that this subsection (a) shall not apply to any documents, work papers,
material, or information which is a matter of public knowledge or which has
heretofore been or is hereafter published in any publication for public
distribution or filed as public information with any governmental authority or
is otherwise in the public domain.
(b)(1) Default by Purchaser. If Purchaser fails or refuses to close in
accordance with the terms of this Agreement and if Seller and the Company have
timely satisfied all the conditions to Purchaser's obligation to close hereunder
and are not in default hereunder, then, and as the exclusive remedy of Seller
and the Company for such breach, Seller and the Company shall receive the sum of
$100,000 from Purchaser as liquidated damages and not a penalty for the breach
hereof by Purchaser (the same as if Purchaser had deposited such sum with Seller
as a down payment or xxxxxxx money hereunder). In this regard, the parties
acknowledge and agree that the damages occasioned to Seller and the Company by
any such breach are difficult of ascertainment or calculation and that the
specified sum of liquidated damages represents a fair and reasonable estimate of
such damages.
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STOCK PURCHASE AGREEMENT PAGE 24
25
(b)(2) Default by Seller and/or the Company. If Seller and/or the
Company fails or refuses to close in accordance with the terms of this Agreement
and if Purchaser has timely satisfied all the conditions to Purchaser's
obligation to close hereunder and is not in default hereunder, Purchaser shall
have the right either (i) to declare this Agreement canceled or (ii) to seek
enforcement of this Agreement at law or in equity, including, without
limitation, an action for specific performance of the terms of this Agreement by
Seller and the Company or for recovery of the actual damages occasioned to
Purchaser by such breach. The provisions of this Section 9.02(b)(2) shall not be
subject to Section 10.03 of this Agreement.
(c) Continuing Liability. The continuing liability of the parties to
this Agreement with respect to any breach of any representation, warranty,
covenant, or agreement contained therein shall not be affected by such
termination or abandonment, unless this Agreement is terminated or abandoned by
agreement of the parties pursuant to Section 9.01 (a) or (d).
ARTICLE X
POST CLOSING REMEDIES
SECTION 10.01 SURVIVAL. The parties agree that all of the representations,
warranties and covenants contained in this Agreement or in any document,
certificate, instrument, schedule or exhibit delivered pursuant to this
Agreement shall survive the Closing only for a period of one (1) year from and
after the Closing Date unless the party claiming a breach shall assert the same
by written notice to the other party within such one-year period; provided,
however, that the representations and warranties of Seller under Sections
2.01-2.04, 2.11, and 2.14, the representations and warranties of Purchaser in
Sections 3.01 and 3.02, the covenants of the parties in Section 5.11, the
provisions of this Article X and of Article XI, and the covenants of
indemnification for any breach of the foregoing under Section 5.14 shall survive
Closing without time limitation.
Section 10.02 OFFSET/WAIVER. Subject to the provisions of Sections 10.01
and 10.03, after the Closing, Purchaser, without limitation of its other rights
and remedies, shall have a right of offset against its obligations under the
Note for any breach of the representations, warranties, and covenants of Seller
and the Company under this Agreement. In any proceedings by the Purchaser to
assert or prosecute any claims under, or to otherwise enforce, this Agreement,
Seller agrees that he will not assert as a defense, or as a bar to recovery, and
hereby waives any right to so assert such defense or such bar to recovery, that
(a) prior to the Closing, the Company shall have had knowledge of the
circumstances giving rise to the claim being pursued by Purchaser, or (b) prior
to the Closing, the Company engaged in conduct or took action that caused or
brought about the circumstances giving rise to such claim, or otherwise
contributed thereto.
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STOCK PURCHASE AGREEMENT PAGE 25
26
Section 10.03 DISPUTE RESOLUTION.
(a) Unless expressly provided otherwise in this Agreement, any and all
claims, disputes, controversies, and other matters in question involving the
parties hereto and arising out of or relating to this Agreement and the
transactions contemplated hereby, any provision hereof, the alleged breach of
such provision, or in any way relating to the subject matter of this Agreement
(collectively, "Disputes"), whether such Disputes sound in contract, tort, or
otherwise, at law or in equity, under State or federal law, whether provided by
statute or common law, for damages or any other relief, shall be resolved in
accordance with this Section 10.03.
(b) The parties shall attempt in good faith to resolve any Dispute
promptly by negotiations between representatives who have authority to settle
the controversy. Any party may give the other party written notice of any
Dispute not resolved in the normal course of business, together with a request
that the parties meet and confer ("Notice of Dispute"). Within fifteen (15) days
after delivery of a Notice of Dispute, the parties or their representatives
shall meet at a mutually acceptable time and place, and thereafter as often as
they reasonably deem necessary, to exchange relevant information and to attempt
to resolve the Dispute. If the matter has not been resolved within thirty (30)
days after delivery of the Notice of Dispute, or if the parties fail to meet
within fifteen (15) days after delivery of the Notice of Dispute, either party
may initiate mediation of the claim or dispute as provided hereafter. If a party
or its representative intends to be accompanied at a meeting by an attorney, the
other parties shall be given advance notice of such intention and may also be
accompanied by an attorney. All negotiations pursuant to this clause are
confidential and shall be treated as compromise and settlement negotiations for
purposes of the Federal Rules of Evidence and any state's rules of evidence.
(c) If a Dispute has not been resolved by negotiation as provided in
Section 10.03(b), the parties shall endeavor to settle the claim or dispute by
mediation under the Center for Public Resources ("CPR") Model Procedure for
Mediation of Business Disputes. A neutral third party will be selected from the
CPR panel of neutrals. If the parties encounter difficulty in agreeing on a
neutral third party, they will seek the assistance of CPR in the selection
process. Mediation under this Section 10.03(c) will commence within sixty (60)
days of the Notice of Dispute.
(d) If the Dispute has not been resolved by non-binding means pursuant
to Sections 10.03(b) or (c) within thirty (30) days of the initiation of
mediation, either party may submit such Dispute for resolution by binding
arbitration as follows:
(i) It is the intention of the parties that the arbitration
shall be conducted pursuant to the Texas Arbitration Act,
Tex. Civ. Prac. & Rem. Code Xxx., Sections 171.001 et seq.
(Xxxxxx 1997 & Supp. 1999) (the "Act"), as modified by this
Agreement. The validity, construction, and interpretation of
this Section 10.03(d), and all procedural aspects of the
arbitration conducted pursuant to this Section 10.03(d),
including, but not limited to, the determination of issues
that are
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STOCK PURCHASE AGREEMENT PAGE 26
27
subject to arbitration (i.e. arbitrability), the scope of
the arbitrable issues, allegations of fraud in the
inducement to enter into this Agreement, or this arbitration
provision, allegations of waiver, laches, delay, or other
defenses to arbitrability, and the rules governing the
conduct of the arbitration (including the time for filing an
answer, the time for filing counterclaims, the times for
amending pleadings, the specificity of the pleadings, the
extent and scope of discovery, the issuance of subpoenas,
the times for designation of experts, whether the
arbitration is to be stayed pending resolution of related
litigation involving third parties not bound by this
Agreement, the receipt of evidence and the like), shall be
decided by the arbitrators. The arbitration shall be
administered by the American Arbitration Association
("AAA"), and shall be conducted pursuant to the Commercial
Arbitration Rules of the AAA, as modified by this Agreement.
Notwithstanding any provision of this Agreement to the
contrary, the parties expressly agree that the arbitrators
shall have absolutely no authority to award incidental,
special, treble, exemplary, or punitive damages of any type
under any circumstances regardless of whether such damages
may be available under Texas law, the law of any other
state, or federal law, or under the Act, or the Commercial
Arbitration Rules of the AAA, the parties hereby waiving
their right, if any, to recover incidental, special, treble,
exemplary, or punitive damages in connection with any such
Disputes.
(ii) The arbitration proceeding shall be conducted in Midland,
Texas before a panel of three (3) arbitrators appointed in
accordance with the Commercial Arbitration Rules of the AAA.
The arbitrators shall conduct a hearing as soon as
reasonably practicable after appointment of the third
arbitrator, and a final decision completely disposing of all
Disputes that are the subject of the arbitration proceedings
shall be rendered by the arbitrators as soon as reasonably
practicable after the hearing. There shall be no transcript
of the hearing before the arbitrators. The arbitrators'
ultimate decision after final hearing shall be in writing,
but shall be as brief as possible, and the arbitrators shall
not assign reasons for their ultimate decision.
(iii) The fees and expenses of the arbitrators shall be borne
equally by the parties, but the decision of the arbitrators
may include such award of the arbitrators' fees and expenses
and of other costs and attorneys' fees as the arbitrators
determine appropriate.
(iv) To the fullest extent permitted by law, the arbitration
proceeding and the arbitrators' award shall be maintained in
confidence by the parties.
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STOCK PURCHASE AGREEMENT PAGE 27
28
(v) The award of the arbitrators shall be binding upon the
parties and final and nonappealable to the maximum extent
permitted by law, and judgment thereon may be entered by a
court of competent jurisdiction and enforced by any party as
a final judgment of such court.
(e) All applicable statutes of limitation and defenses based upon the
passage of time shall be tolled while the procedures specified in Sections
10.03(b) and (c) are pending. The parties will take such actions, if any, as may
be required to effectuate such tolling.
(f) Each party is required to continue to perform its obligations
under this Agreement pending final resolution of any Dispute covered by this
Article X.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified, or supplemented only by writing duly
executed by all of the parties hereto.
Section 11.02 WAIVER OF COMPLIANCE. Any failure of the Seller or the
Company, on the one hand, or Purchaser, on the other, to comply with any
obligation, covenant, agreement or condition contained herein may be expressly
waived in writing by Purchaser or Seller and the Companies, respectively;
provided, however, such waiver or failure to insist upon strict compliance shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
Section 11.03 NOTICES. All notices, requests, demands, and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand (including, without
limitation, by overnight courier), transmitted by facsimile, or mailed,
certified or registered mail (return receipt requested) with postage prepaid:
(a) if to Seller or the Company, to:
Xx. Xxxxx X. Xxxxxx
Xxx 000
Xxxxxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Sundown Operating Company, Inc.
X.X. Xxx 000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
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STOCK PURCHASE AGREEMENT PAGE 28
29
with a copy to:
Xxxxxxxx X. Xxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
or to such other person or addresses as Seller or the Company shall furnish
Purchaser in writing in accordance with this Section 11.03; and
(b) if to Purchaser, to:
Sierra Well Service, Inc.
000 X. Xxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, President
with a copy to:
Xxxx & Xxxx, L.L.P.
000 X. Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Xx.
or to such other persons or addresses as Purchaser shall furnish to Seller and
the Company in writing in accordance with this Section 11.03.
Delivery of notices shall be effective only upon actual receipt by the
intended recipient (or, in the case of facsimile transmission, the completion of
such transmission during the recipient's normal business hours).
Section 11.04 EXPENSES. Purchaser shall pay its own fees and expenses,
including, without limitation, professional fees and expenses, incurred in
connection with the negotiation, execution, and performance of this Agreement
and the transactions contemplated hereby. All fees and expenses of Seller and
all fees and expenses of the Company for periods to and including the Closing
Date,
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STOCK PURCHASE AGREEMENT PAGE 29
30
including, without limitation, professional fees and expenses, incurred in
connection with the negotiation, execution, and performance of this Agreement
and the transactions contemplated hereby, shall be borne and paid either by the
Company prior to Closing or by Seller.
Section 11.05 BINDING NATURE; NO THIRD PARTY BENEFICIARIES. This Agreement
and all of the provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
Nothing contained herein, express or implied, is intended to confer on any
person other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
Section 11.06 GOVERNING LAW. This Agreement, and the legal relations among
the parties hereto arising from this Agreement, shall be governed by and
construed in accordance with the Laws of the State of Texas, without regard to
its conflicts of laws rules.
Section 11.07 ENTIRE AGREEMENT. This Agreement (including the exhibits and
schedules hereto and the other instruments referred to herein) embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
warranties, covenants or undertakings, other than those expressly set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such subject matter.
Section 11.08 HEADINGS. The headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 11.09 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
Section 11.10 SEVERABILITY. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under present or future law, such
provision shall be fully severable and this Agreement shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part hereof, and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid, or unenforceable provision, there shall be added
automatically, as part of this Agreement, a provision as similar in terms and
substance to such illegal, invalid, or unenforceable provision as may be
possible and legal, valid, and enforceable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and made and entered into as of the date first set forth above.
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STOCK PURCHASE AGREEMENT PAGE 30
31
SELLER:
/s/ XXXXX X. XXXXXX
-----------------------------------
XXXXX X. XXXXXX
THE COMPANY:
SUNDOWN OPERATING, INC. d/b/a
SUNDOWN WELL SERVICE
By: /s/ XXXXX X. XXXXXX
--------------------------------
Printed Name: XXXXX XXXXXX
----------------------
Title: President
-----------------------------
PURCHASER:
SIERRA WELL SERVICE, INC., a
Delaware corporation
By: /s/ XXXXXXX X. XXXXXXX
--------------------------------
Printed Name: XXXXXXX X. XXXXXXX
----------------------
Title: President
-----------------------------
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STOCK PURCHASE AGREEMENT PAGE 31
32
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A THE NOTE
EXHIBIT B THE SECURITY DOCUMENTS
EXHIBIT C THE FINANCIAL STATEMENTS
EXHIBIT D NON-COMPETITION AGREEMENT
SCHEDULE 1.02 EXCLUDED ASSETS
SCHEDULE 2.08 EXTRAORDINARY TRANSACTIONS
SCHEDULE 2.10 EMPLOYEE BENEFIT PLANS
SCHEDULE 2.12(a) REAL PROPERTY
SCHEDULE 2.12(b) PERSONAL PROPERTY
SCHEDULE 2.13 EXISTING LIENS
SCHEDULE 2.17 CONTRACTS
SCHEDULE 2.19 INSURANCE POLICIES
SCHEDULE 2.20 BANK ACCOUNTS
SCHEDULE 2.21 OTHER LIABILITIES
SCHEDULE 2.23 AFFILIATE TRANSACTIONS
SCHEDULE 5.12 REIMBURSABLE VEHICLE ACQUISITION COSTS
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STOCK PURCHASE AGREEMENT PAGE 32
33
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT ("First Amendment") is
made and entered into as of the 20th day of March 2000, between XXXXX X. XXXXXX
("Seller"), SUNDOWN OPERATING, INC. d/b/a SUNDOWN WELL SERVICE, a Texas
corporation (the "Company"), and SIERRA WELL SERVICE, INC., a Delaware
corporation ("Purchaser"), with reference to the following:
RECITALS
A. Seller, the Company, and Purchaser are parties to that certain Stock
Purchase Agreement (the "Agreement") dated as of February 8, 2000, relating to
the sale and purchase of all of the issued and outstanding capital stock of the
Company.
B. Seller and Purchaser wish to amend the Agreement upon the terms
which follow.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS. Except as expressly indicated otherwise herein,
capitalized terms in this First Amendment shall have the same meanings as are
ascribed to them in the Agreement.
2. EXTENSION OF CLOSING DATE. Seller, the Company, and Purchaser
hereby modify and amend existing Section 8.01 of the Agreement to read as
follows:
Section 8.01 CLOSING. The closing ("Closing") of the
transaction contemplated hereby shall take place at the
offices of Purchaser at 000 X. Xxx Xxxxxx, Xxxxxxx, Xxxxx, on
a business date of Purchaser's unilateral selection within
thirty (30) days following any successful completion by
Purchaser of an initial public offering of common stock in the
Company through a recognized national stock exchange (the
"Sierra IPO"), but in no event later than June 30, 2000, or at
such other place and time as the parties hereto might
hereafter mutually agree in writing. Such date or any
alternative date so selected by the parties is referred to in
this Agreement as the "Closing Date." Purchaser shall afford
Seller and the Company at least ten (10) days prior written
notice of its desired Closing Date pursuant to the foregoing.
3. XXXXXXX MONEY DEPOSIT. If Closing shall not have occurred by
April 28, 2000, then on or before that date, Purchaser shall deposit the sum of
One Hundred Thousand and No/100 Dollars ($100,000.00) ("Xxxxxxx Money") with
Seller in immediately available funds. Seller shall hold the Xxxxxxx Money in a
segregated, interest bearing account for demand deposits. All interest
34
thus derived shall become part of the Xxxxxxx Money and shall be paid to the
party entitled to the Xxxxxxx Money in accordance with the terms hereof. The
Xxxxxxx Money shall be applied to a corresponding amount of the Purchase Price
at Closing. If Closing fails to occur due to circumstances entitling Seller and
the Company to receive the $100,000.00 stipulated amount of liquidated damages
under Section 9.02(b)(1) of the Agreement, Seller shall be entitled to keep the
Xxxxxxx Money in full satisfaction of all claims of Seller and the Company for
Purchaser's failure to close, including, without limitation, its obligation to
pay liquidated damages under Section 9.02(b)(1). If Closing fails to occur for
any other reason, Seller shall immediately refund the Xxxxxxx Money to Purchaser
and Purchaser shall be entitled to keep the same without limiting or affecting
Purchaser's remedies under Section 9.02(b)(2) of the Agreement (to the extent
applicable).
4. CONFIRMATION. The parties hereto hereby ratify, confirm, and
adopt the Agreement, as amended hereby. Except as modified hereby, the Agreement
remains in full force and effect.
5. FAX; COUNTERPARTS. This First Amendment may be executed by fax
and in multiple counterparts.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
First Amendment as of the day and year first above written.
SELLER:
/s/ XXXXX X. XXXXXX
------------------------------------
XXXXX X. XXXXXX
THE COMPANY:
SUNDOWN OPERATING, INC. d/b/a
SUNDOWN WELL SERVICE
By: /s/ XXXXX XXXXXX
---------------------------------
Printed Name: XXXXX XXXXXX
-----------------------
Title: President
------------------------------
PURCHASER:
SIERRA WELL SERVICE, INC., a
Delaware corporation
By: /s/ XXXXXXX XXXXX
---------------------------------
Printed Name: XXXXXXX XXXXX
-----------------------
Title: Vice President
------------------------------
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FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT PAGE 2
