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EXHIBIT 10.20
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into as
of the 29th day of February 2000, by and between XXX XXXXX and XXXXX XXXXXX
(collectively, Seller), XXXXXX WELL SERVICING CO., INC., a New Mexico
corporation (the "Company"), and SIERRA WELL SERVICE, INC., a Delaware
corporation ("Purchaser").
RECITALS:
A. The Company is a New Mexico corporation based out of Xxxxxx, New
Mexico, 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 DISTRIBUTION OF CERTAIN ASSETS. At or prior to
Closing, the Company shall distribute to Seller, without representation,
warranty, or recourse by or upon the Company, and without adverse tax effect
upon the Company, all of its right, title and interest in and to the assets
listed on attached SCHEDULE 1.02 (collectively, the "Excluded Assets"). In
connection with such distribution, 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)
arising from or in connection with the acquisition, ownership, operation, use,
or distribution of the Excluded Assets by the Company, specifically including,
without limitation, any adverse tax consequences occasioned to or suffered by
the Company or Purchaser as a consequence of the distribution of the Excluded
Assets to Seller pursuant to this Section 1.02.
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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) $2,050,000.00 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) $1,650,000.00 plus
or minus (b) NFA, as preliminarily estimated and finally
adjusted pursuant to Section 5.08; and
(2) Purchaser shall execute and deliver to Seller at Closing
its promissory note (the "Note") in the original principal
amount of $400,000.00, 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 applicable quarterly adjustment date, and
payable to the order of Seller on or before one year from
the date thereof, said Note to be substantially identical
in form and substance to that attached hereto as EXHIBIT
A, and, subject to any requisite consents of existing
lenders of the Company, to be secured by security
interests upon the tangible personal property of the
Company as of Closing that are junior in priority to any
liens and security interests upon such assets as of the
Closing Date, as created by a security agreement
substantially identical in form and substance to that
attached hereto as EXHIBIT B (collectively, the "Security
Agreement").
As used in this Agreement, "net financial assets" shall mean the
difference between (a) "Current Assets" and (b) "Total Liabilities" (including,
"Current Liabilities," "Long-Term Debt, less current maturities," and "Long-Term
Obligation under Capital Lease"), 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 5.08 to reflect changes between the date of the
Preliminary Audited Balance Sheet and the Closing Date.(i.e. CA - TL = net
financial assets). The calculation of NFA as of the Closing Date shall, in
particular, but without limitation, give effect to the distribution of the
Excluded Assets to Seller by the Company pursuant to Section 1.02 and any tax
liabilities occasioned to the Company from such distribution.
Notwithstanding the foregoing, as among Seller, the Purchase Price shall
be paid and payable to and among Seller, in accordance with their respective
interests in the Stock as shown on attached SCHEDULE 2.11, as Seller shall
jointly direct Purchaser in writing at Closing under this Agreement.
Section 1.04 BREAKUP FEE. Within three (3) business days following
execution and delivery of this Agreement by all parties, Purchaser shall deposit
with X. X. Xxxx, 000 X. Xxxx, Xxxxx, Xxx Xxxxxx 00000, Telephone: (505)
000-0000; Fax: (000) 000-0000 (the "Escrow Agent"), the sum of TWENTY FIVE
THOUSAND AND NO/100 DOLLARS ($25,000.00) in immediately available funds (the
"Breakup Fee"). The Escrow Agent shall, promptly upon its receipt of the
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Breakup Fee, place the same in an interest bearing account for demand deposits
that is approved by Seller and Purchaser. All interest so derived shall be added
to and become a part of the Breakup Fee. If the sale contemplated hereby is
closed pursuant to the terms of this Agreement, the Breakup Fee shall be applied
to a corresponding amount of the Purchase Price payable by Purchaser to Seller
at the Closing. If this Agreement is terminated by Purchaser in accordance any
right of termination afforded to Purchaser in this Agreement, the Breakup Fee
shall be returned to Purchaser. The Breakup Fee shall otherwise be applied,
remitted, or paid as elsewhere provided in this Agreement. The Escrow Agent
agrees promptly to deliver, or cause to be delivered, to Seller and Purchaser
written acknowledgments of its receipt of a fully signed copy of this Agreement
and the Breakup Fee as and when deposited with the Escrow Agent, together with
his confirmation that the Breakup Fee will be held by the Escrow Agent pursuant
to the terms of this Agreement.
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 10,000 shares of common stock, par value $27.00 per
share. As of the date hereof, 175 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 8 shares of capital stock, all of which are held in treasury. None of
such
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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 the part of Seller or the Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated. 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) 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,
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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
preliminary audited balance sheet of the Company for the period ending as of
December 31, 1999 (the "Preliminary Audited Balance Sheet") and the statements
of operations, changes in stockholders equity, and cash flows of the Company for
the period ending as of December 31, 1999, copies of all of which are 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 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 the date of the
Preliminary Audited Balance Sheet, except as shown on attached SCHEDULE 2.08,
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
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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 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 $20,000, or (o) any agreement by Seller
or the Company to do any of the items described in Subparagraphs (a) through (n)
above.
Section 2.09 ABSENCE OF LITIGATION. 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 in the proportions among Seller set forth on attached SCHEDULE
2.11, free and clear of liens, claims, and encumbrances of any kind or
character.
Section 2.12 ASSETS OF THE COMPANY. SCHEDULE 2.12 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
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Company in connection with the Company's business. Except as shown on SCHEDULE
2.12, 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 1361 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 April 30 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 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
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the Company or any officers (and employees responsible for Tax matters) of
the Company have knowledge.
Section 2.15 ENVIRONMENTAL MATTERS. Except as disclosed by Seller or the
Company in writing to Purchaser or in the Environmental Report (hereinafter
defined):
(a) To the best knowledge of Seller and the Company, 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) To the best knowledge of Seller and the Company, the Company
possesses any permits required under Environmental Laws for the operation of its
assets.
(c) To the best knowledge of Seller and the Company, 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) To the best knowledge of Seller and the Company, 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, New Mexico 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.
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. To the best of Seller's knowledge, all of the
Contracts are in full force and effect and the Company is not in default under
any of the Contracts.
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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 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"
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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.
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) to
the knowledge of Purchaser, conflict with or violate any law applicable to
Purchaser or by which any of its assets are bound or affected or (iii) to the
knowledge of Purchaser, 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,
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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) To the knowledge of Purchaser, 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;
(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
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STOCK PURCHASE AGREEMENT Page 11
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(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. Without the prior written consent of
Purchaser, such consent not to be unreasonably withheld, and except as otherwise
provided in this Agreement, the Company will not (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.
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
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STOCK PURCHASE AGREEMENT Page 12
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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 PURCHASER'S INSPECTION RIGHTS. Pending Closing, 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. 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, during the Inspection Period and
thereafter until 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 5.02 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 5.03 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
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STOCK PURCHASE AGREEMENT Page 13
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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 5.04 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 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 5.05 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 5.06 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 5.07 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 5.07 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 5.08 PRELIMINARY AND FINAL COMPUTATIONS OF NFA. As part of its
diligence processes in this transaction, Purchaser 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
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STOCK PURCHASE AGREEMENT Page 14
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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 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 10.02 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 5.08,
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 5.09 ACCOUNTS RECEIVABLE. Seller expressly represents and
warrants that all 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,
Purchaser and the Company shall first offset the face amount of such unpaid
receivables against the unpaid principal balance of the Note, if any, and, to
the extent of any deficiency, may then require Seller to immediately purchase
the remaining unpaid receivables from the Company at full face value and without
subsequent recourse of any kind upon the Company or Purchaser.
Section 5.10 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 the
end of the April 30, 2000 fiscal year of the Company. Purchaser shall be
responsible for the timely preparation and filing (without extension, unless
otherwise agreed by
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STOCK PURCHASE AGREEMENT Page 15
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Purchaser in writing) of all federal, state, and local Tax Returns covering or
for (or based upon income received or realized during) all periods following the
end of the April 30, 2000 fiscal year of the Company. 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. 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 5.11 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 5.12 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
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STOCK PURCHASE AGREEMENT Page 16
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(iii) 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.
(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 5.13 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 5.14 INVESTMENT REPRESENTATIONS BY SELLERS. Upon Closing and in
connection with any conversion of the unpaid balance of the Note into common
stock of Purchaser as more particularly provided in the Note, Seller expressly
represents, warrants, acknowledges, and agrees to and with Purchaser and 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
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STOCK PURCHASE AGREEMENT Page 17
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unless the holder of the Stock delivers to Purchaser an
opinion of counsel, satisfactory to Purchaser, that such
registration or other qualification under 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 5.15 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.
Section 5.16 RELEASE OF PERSONAL GUARANTIES. Within sixty (60) days
following Closing, Purchaser and the Company shall cause Seller to be released
from the personal guaranties which are shown on attached SCHEDULE 5.16 or shall
cause the indebtedness which is the subject of any such unreleased guaranties to
be fully paid.
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STOCK PURCHASE AGREEMENT Page 18
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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 5.04 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, X. X. Xxxx, in form and substance reasonably acceptable to Purchaser
and its counsel, and favorably addressing the organization, qualification, good
standing, and capitalization of the Company, the due and proper authorization,
execution, and delivery and the enforceability of this Agreement and all
instruments and documents executed by Seller and the Company in connection
herewith, and such other matters as Purchaser or its counsel may reasonably
require.
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.
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.
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STOCK PURCHASE AGREEMENT Page 19
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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 PHASE I ENVIRONMENTAL REPORT. Seller shall have delivered
to Purchaser, at Seller's expense, a Phase I environmental report covering the
premises to be leased under the Yard Lease (hereinafter defined) prepared by an
environmental consulting firm and in form and substance reasonably acceptable to
Purchaser.
Section 6.10 ACTIONS OF CUSTODIAN. First Financial Trust Company, in its
capacity as Custodian of the Xxx Xxxxx XXX Account and the Xxxxx Xxxxxx XXX
Account, shall have taken all actions necessary to transfer title to that
portion of the Stock within such accounts to Purchaser.
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 5.04 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.
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.
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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 7.01and certifying its
performance hereunder as contemplated by Section 7.02.
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 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.
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;
(d) Seller and Purchaser shall execute and deliver an employment
agreement which is substantially identical in form and substance to that
attached hereto as EXHIBIT D;
(e) Seller, the Company and Purchaser shall execute and deliver a
non-competition agreement which is substantially identical in form and substance
to that attached hereto as EXHIBIT E;
(f) Seller and Purchaser shall execute and deliver a lease
agreement covering the office, shop, and yard currently utilized by the Company,
said lease to be substantially identical in form and substance to that attached
hereto as EXHIBIT F (the "Yard Lease");
(g) The parties shall attempt to agree upon an estimate of NFA
and shall execute a preliminary closing statement as contemplated by Section
5.08;
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(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
(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 30, 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 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
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STOCK PURCHASE AGREEMENT Page 22
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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
have the right to declare this Agreement terminated and to receive the Breakup
Fee 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.
(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
be entitled to an immediate refund of the Breakup Fee and, in addition, 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.
(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 (e).
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STOCK PURCHASE AGREEMENT Page 23
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ARTICLE X
POST CLOSING REMEDIES
Section 10.01 OFFSET/WAIVER. Subject to the provisions of Section 10.02,
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.
Section 10.02 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 10.02.
(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 arbitration 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 the Dispute is not resolved by negotiation pursuant to
Section 10.02(b), either party may submit such Dispute for resolution by binding
arbitration as follows:
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STOCK PURCHASE AGREEMENT Page 24
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(i) It is the intention of the parties that the
arbitration shall be conducted pursuant to the New
Mexico Arbitration Act (the "Act"), as modified by
this Agreement. The validity, construction, and
interpretation of this Section 10.02(c), and all
procedural aspects of the arbitration conducted
pursuant to this Section 10.02(c), including, but
not limited to, the determination of issues that
are 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 New Mexico 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
Hobbs, New Mexico 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.
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STOCK PURCHASE AGREEMENT Page 25
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(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.
(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.
(d) All applicable statutes of limitation and defenses based upon
the passage of time shall be tolled while the procedures specified in Sections
10.02(b) are pending. The parties will take such actions, if any, as may be
required to effectuate such tolling.
(e) 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:
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STOCK PURCHASE AGREEMENT Page 26
27
(a) if to Seller or the Company (only until the Closing Date),
to:
Mr. Rex Xxxxx
Xxxxxx Well Servicing Co., Inc.
P. X. Xxx 000
Xxxxxx, Xxx Xxxxxx 00000
Telephone: (____) _______
Fax: (____) _____________
with a copy to:
Xx. X. X. Xxxx
000 X. Xxxx
Xxxxx, Xxx Xxxxxx 00000
Telephone: (505) ________________
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 (or to the Company after Closing), 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.
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STOCK PURCHASE AGREEMENT Page 27
28
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 SURVIVAL. This Agreement is intended in part to evidence
the continuing rights and obligations of the parties following Closing, and all
of the representations, warranties, covenants, and obligations of the parties
are hereby expressly made to survive Closing.
Section 11.05 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, 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 exclusively by
Seller.
Section 11.06 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 11.07 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 New Mexico, without regard
to its conflicts of laws rules.
Section 11.08 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 11.09 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 11.10 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 11.11 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
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STOCK PURCHASE AGREEMENT Page 28
29
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.
Section 11.12 DIRECTIVE TO CUSTODIAN/LIMITATION ON CUSTODIAL LIABILITY.
By their execution hereof, Xxx Xxxxx and Xxxxx Xxxxxx hereby (i) authorize and
direct First Financial Trust Company in its capacities as Custodian of the Xxx
Xxxxx XXX Account and as Custodian of the Xxxxx Xxxxxx XXX Account to take such
actions upon Closing as are necessary to transfer any portion of the Stock held
by it in such capacities to Purchaser; and (ii) acknowledge and agree that this
Agreement shall be fully binding upon and applicable to any beneficial or other
interest they may own in such XXX accounts.
Section 11.13 JOINT AND SEVERAL LIABILITY OF SELLER. The parties
comprising Seller are and shall be jointly and severally liable for any breach
of the representations, warranties, and covenants of Seller under this Agreement
and any instruments and documents executed by Seller in connection herewith.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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STOCK PURCHASE AGREEMENT Page 29
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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.
SELLER:
/s/ XXX XXXXX
------------------------------------
XXX XXXXX
/s/ XXXXX XXXXXX
------------------------------------
XXXXX XXXXXX
THE COMPANY:
XXXXXX WELL SERVICING CO., INC., a New
Mexico corporation
By: /s/ XXX XXXXX
---------------------------------
Printed Name: Xxx Xxxxx
-----------------------
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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STOCK PURCHASE AGREEMENT Page 30
31
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A THE NOTE
EXHIBIT B THE SECURITY AGREEMENT
EXHIBIT C THE FINANCIAL STATEMENTS
EXHIBIT D THE EMPLOYMENT AGREEMENT
EXHIBIT E NON-COMPETITION AGREEMENT
EXHIBIT F YARD LEASE
SCHEDULE 1.02 EXCLUDED ASSETS
SCHEDULE 2.08 EXTRAORDINARY TRANSACTIONS
SCHEDULE 2.10 EMPLOYEE BENEFIT PLANS
SCHEDULE 2.11 OWNERSHIP OF THE STOCK
SCHEDULE 2.12 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 5.17 PERSONAL GUARANTIES OF SELLER
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STOCK PURCHASE AGREEMENT Page 31
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EXHIBIT A
SECURED PROMISSORY NOTE
$400,000.00 Hobbs, New Mexico ____________, 2000
FOR VALUE RECEIVED, the undersigned, SIERRA WELL SERVICE, INC., a
Delaware corporation ("Maker"), promises to pay to the order of [PARTIES SELLER
TO BE DESIGNATED BY SELLER PURSUANT TO SECTION 1.03 OF THE AGREEMENT] ("Payee"),
at P. X. Xxx 000, Xxxxxx, Xxx Xxxxxx 00000, the principal sum of FOUR HUNDRED
THOUSAND AND NO/100 DOLLARS ($400,000.00), together with interest on the unpaid
principal balance from day to day outstanding prior to default or maturity at
per annum rate equal to the lesser of (i) the Prime Rate (hereinafter defined)
in effect hereunder (the "Established Rate") (calculated on the basis of actual
days elapsed in a year consisting of 365 or 366 days, as appropriate) or (ii)
the Maximum Rate (hereinafter defined) (calculated on the basis of actual days
elapsed in a year consisting of 365 or 366 days, as appropriate). If at any time
and from time to time the Established Rate exceeds the Maximum Rate, thereby
causing the interest payable to be limited to the Maximum Rate, then any
subsequent reduction in the Established Rate shall not reduce the rate of
interest hereunder below the Maximum Rate until the total amount of interest
accrued hereon equals the amount of interest that would have accrued if the
Established Rate had at all times been in effect. All past due principal of and
accrued interest on this Note shall bear interest at the Maximum Rate.
As used herein, "Prime Rate" shall mean the rate of interest denominated
and published as such by the Wall Street Journal on the first Friday most
immediately preceding the date of this Note that is a business day.
As used herein, "Maximum Rate" shall mean the maximum non-usurious rate
of interest that at any time, or from time to time, may be contracted for,
taken, reserved, charged, or received under applicable law on the indebtedness
evidenced by this Note, after taking into account, to the extent required by
applicable law, any and all relevant payments, charges, or other amounts under
this Note and all instruments securing payment of this Note.
The principal of and accrued interest on this Note are due and payable
one year from the date hereof. This Note may be prepaid in whole or in part
without penalty. Partial prepayments shall be applied first to any accrued and
unpaid interest and the balance remaining, if any, to principal.
This Note is secured by that certain Security Agreement of even date
herewith, between Xxxxxx Well Servicing, Inc., as Grantor, and Payee, as Secured
Party, covering all of the equipment and other tangible personal property
therein described.
It is understood and agreed that in the event of default in the payment
of this Note or any installment hereof, principal or interest, and if such
default shall continue unremedied for more than ten (10) days following written
notice thereof from Payee to Maker, or in the event of any default (other than
non-payment of this Note) in any instrument securing payment of this Note and if
such default shall continue unremedied for more than thirty (30) days following
written notice thereof from Payee to Maker, the entire principal balance of and
all accrued and unpaid interest on this Note shall at once become due and
payable without notice, at the option of Payee. Failure by Payee to exercise
this option on any one or more occasions shall not constitute a waiver of the
right to exercise such option in the event of subsequent default.
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STOCK PURCHASE AGREEMENT Page 33
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Except as otherwise herein expressly provided, the makers, signers,
sureties, and endorsers of this Note jointly and severally waive demand,
presentment, notice of dishonor, notice of intent to demand or accelerate
payment hereof, diligence in collecting, grace, notice, and protest, and agree
to one or more extensions for any period or periods of time and partial
payments, before or after maturity, without prejudice to Payee; and if this Note
shall be collected by legal proceedings or through probate or bankruptcy court,
or shall be placed in the hands of an attorney for collection after default or
maturity, Maker agrees to pay all costs of collection, including reasonable
attorney's fees.
All agreements between Maker and Payee, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that under
no contingency, whether by reason or demand for payment or acceleration of the
maturity hereof or otherwise, shall the interest contracted for, charged, or
received by Payee exceed the Maximum Rate. If, for any circumstance whatsoever,
interest would otherwise be payable to Payee in excess of the Maximum Rate, the
interest payable to Payee hereunder shall be reduced to the Maximum Rate; and if
for any circumstance Payee shall ever receive anything of value deemed interest
by applicable law in excess of the Maximum Rate, then an amount equal to any
such excess shall be applied to the reduction of the principal hereof and not
the payment of interest, or if such excessive interest exceeds the unpaid
balance of principal hereof, such excess shall be refunded to Maker. All
interest paid or agreed to be paid to Payee shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full period until payment in full of the principal (including the period of any
renewal or extension hereof) so that the interest hereon for such full period
shall not exceed the Maximum Rate.
Any provisions of this Agreement to the contrary notwithstanding, if
Maker shall successfully conclude an initial public offering of common stock in
Maker through a nationally recognized stock exchange at any time prior to
maturity of this Note, whether stated or by acceleration, (the "Sierra IPO")
Maker shall confer written notice thereof upon Payee and Payee shall thereupon
have the right, exercisable at any time prior to maturity hereof as hereinafter
provided, at its sole option, to convert the unpaid balance of this note to
common stock in Maker at a per share price equivalent to the per share price at
which Sierra issued its common stock in the Sierra IPO. Payee shall exercise
such optional right by conferring written notice of exercise upon Maker prior to
maturity hereof, whether stated or by acceleration, accompanied by the original
of this note, marked "PAID," in return for which Maker shall issue the requisite
number of shares of its common stock to Payee. The failure by Payee to exercise
optional right in the time and manner specified shall cause such right to
terminate automatically and without necessity of further action by Payee.
This Note is in all respects subject to that certain Stock Purchase
Agreement dated as of February 29, 2000, between Xxx Xxxxx and Xxxxx Xxxxxx, as
Seller, Xxxxxx Well Servicing, Inc., as the Company, and Maker, as Purchaser.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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STOCK PURCHASE AGREEMENT Page 34
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This Note shall be governed by and construed in accordance with the laws
of the State of New Mexico.
SIERRA WELL SERVICE, INC.
By:
------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
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STOCK PURCHASE AGREEMENT Page 35
35
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 XXX XXXXX and
XXXXX XXXXXX (collectively, Seller), XXXXXX WELL SERVICING CO., INC., a New
Mexico 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 29, 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. 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.
2. 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.
3. 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.
36
4. 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/ XXX XXXXX
-------------------------------------
XXX XXXXX
/s/ XXXXX XXXXXX
-------------------------------------
XXXXX XXXXXX
THE COMPANY:
XXXXXX WELL SERVICING CO., INC.,
a New Mexico corporation
By: /s/ XXX XXXXX
---------------------------------
Printed Name: XXX XXXXX
------------------------
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
