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EXHIBIT 10.17
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into as
of the 1st day of March 2000, by and between XXXXXX X. BEST, INDIVIDUALLY, and
XXX XXXXXX, TRUSTEE OF THE BEST CHILDREN'S TRUST (collectively, "Seller"), TAT
(TURN AROUND TRUCKING), INC., a Texas corporation (the "Company"), and SIERRA
WELL SERVICE, INC., a Delaware corporation ("Purchaser").
RECITALS:
A. The Company is based out of Kingsville, Texas, and is principally
engaged in the oilfield servicing business in South Texas (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) $6,450,000.00, plus or minus (B) the "net financial
assets" (as defined below) of the Company as of the Closing Date ("NFA"), and
(C) minus, to the extent not reflected as a liability on the Preliminary Audited
Balance Sheet (hereinafter defined), the amounts necessary to fully retire all
future payment obligations under any vehicle lease obligations of the Company as
of the Closing Date, payable by Purchaser to Seller as follows:
(1) Purchaser shall pay to Xxxxxx X. Best, as Collection
Agent for Seller, in immediately available funds at
the Closing a sum equal to (a) $5,150,000.00, plus or
minus (b) NFA, as preliminarily estimated and finally
adjusted pursuant to Section 5.09, minus (c) to the
extent not reflected as a liability on the
Preliminary Audited Balance Sheet, the amounts
necessary to fully retire all future payment
obligations under any vehicle lease obligations of
the Company as of the Closing Date, minus (d) the
Escrowed Funds (hereinafter defined) as provided for
in Section 1.04; and
(2) Purchaser shall execute and deliver to Xxxxxx X.
Best, as Collection Agent for Seller, at Closing its
promissory note (the "Note") in the original
principal amount of $1,300,000.00, 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 said Collection Agent on or before one
year from date, said Note to be substantially
identical in form and substance to that attached
hereto as EXHIBIT A, to be convertible into equity in
Sierra under certain circumstances as therein
specified, and to be secured by a lien and security
interest upon the tangible assets of the Company as
of Closing that is junior in priority to any liens
upon such assets as of the Closing, as created by
security documents substantially identical in form
and substance to those attached hereto as EXHIBIT B
(collectively, the "Security Documents").
As used in this Agreement, "net financial assets" means the difference
between (a) "Total Current Assets" and (b) "Total Liabilities", as such account
groups are shown on the Preliminary Audited Balance Sheet and then adjusted or
converted as of the Closing Date pursuant to Section 5.09.
As covenants which shall survive Closing hereunder without time
limitation, upon Closing, Seller hereby agrees to indemnify and hold Purchaser
and the Company harmless from and against any and all claims, demands, causes of
action, liabilities, losses, and/or expenses (including reasonable attorneys'
fees and expenses) arising from or attributable to payment of the Purchase Price
and the Note to Xxxxxx X. Best, as Collection Agent for Seller, in accordance
with this Section 1.02 and the Note, and Seller further agrees to look solely to
Xxxxxx X. Best, in his capacity as Collection
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STOCK PURCHASE AGREEMENT PAGE 2
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Agent, for disbursement of the Purchase Price, including, but not limited to the
proceeds of the Note, to and among Seller as Seller shall direct him in writing
at or prior to Closing.
Section 1.04 ESCROWED FUNDS. At the Closing, Seller, Purchaser, and the
Escrow Agent (as defined in the Escrow Agreement) shall enter into an escrow
agreement that is substantially identical in form and substance to that attached
hereto as EXHIBIT C (the "Escrow Agreement"), pursuant to which Purchaser shall
deposit (out of the Purchase Price) the sum of $200,000 (the "Escrowed Funds")
into the account established thereunder (the "Escrow Account"), to serve as a
source of security for the payment of any claims asserted by Purchaser within
six (6) months from the Closing Date (hereinafter defined) (the "Escrow Period")
against Seller for the breach of any of the respective representations,
warranties, and/or covenants made by Seller and/or the Company to Purchaser
under this Agreement. The establishment of the Escrow Account and any exercise
of recourse thereon by Purchaser shall not operate or be deemed to operate to
limit or restrict any other legal or equitable rights or remedies available to
Purchaser for any such breach by Seller or the Company, subject to the terms
hereof. The Escrow Account shall be administered as set forth in Article X of
this Agreement and as set forth in the Escrow 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.
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Section 2.03 CAPITALIZATION OF THE COMPANY. The authorized capital
stock of the Company consists of 1,000 shares of common stock, par value $1.00
per share. As of the date hereof, 1,000 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). 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.
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STOCK PURCHASE AGREEMENT PAGE 4
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Section 2.06 COMPLIANCE; PERMITS. The Company is not in conflict with,
or in default under or violation of, (i) any federal, state, or local laws
applicable to the Company or by which the Company or any of the assets of the
Company are bound or affected or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company is a party or by which the Company or its assets
are bound or affected. The Company possesses all permits, licenses, leases,
agreements, and authorizations of governmental authorities and any other
applicable persons or entities necessary to or for the operation of its assets,
properties, and business, all of which permits, licenses, leases, agreements,
and authorizations are in full force and effect.
Section 2.07 REPORTS AND FINANCIAL STATEMENTS OF THE COMPANY. The
preliminary balance sheet for the period ending as of September 30, 1999 (the
"Preliminary Audited Balance Sheet"), and the preliminary statements of
operations, cash flows, and stockholders' equity for the period ending as of
September 30, 1999, copies of all of which are attached hereto as EXHIBIT D
(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 September 30,
1999, except as shown on attached SCHEDULE 2.08 or as otherwise expressly
permitted under this Agreement, the Company has conducted its businesses only in
the ordinary course and in a manner consistent with past practice and, since
such date, except as shown on SCHEDULE 2.08, there has not been (a) any material
adverse change in the financial condition, results of operations, or business of
the Company, (b) any material damage, destruction, or loss (whether or not
covered by insurance) with respect to any assets of the Company, (c) any change
by the Company in its accounting methods, principles, or practices, (d) any
entry by the Company into any commitments or transactions material to the
Company, (e) any declaration, setting aside, or payment of any dividends or
distributions in respect of shares of the Stock or any redemption, purchase, or
other acquisition of any of the capital stock of the Company, (f) any increase
or decrease in or establishment or termination of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase, or other employee benefit plan of the Company,
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STOCK PURCHASE AGREEMENT PAGE 5
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or any other increase in the compensation payable or to become payable to any
officers or key employees of the Company, (g) any incurrence of any indebtedness
or other obligations or liabilities by the Company, (h) any proposed law or
regulation or any actual event or condition of any character that is known to
the Seller or the Company that materially adversely affects the business or
future prospects of the Company, (h) any claim, litigation, event, or condition
of any character that materially adversely affects the business or future
prospects of the Company, (i) any issuance or purchase of, or agreement to issue
or purchase shares of the capital stock or other securities of the Company, (j)
any mortgage, pledge, lien, or encumbrance made or agreed to be made on any of
the Company's assets or properties, (k) any sale, transfer, other disposition
of, or agreement to sell, transfer, or dispose of the Company's properties or
assets, tangible or intangible, except as expressly permitted by this Agreement
and except in the ordinary course of business and then only for full and fair
value received, (l) any loans, advances, or agreements with respect to any loans
or advances, other than to customers in the ordinary course of business and that
have been properly reflected as "accounts receivable" on the Company's books;
(m) any transaction outside the ordinary course of business, (n) any capital
expenditure by the Company in excess of $15,000, or (o) any agreement by Seller
or the Company to do any of the items described in Subparagraphs (a) through (n)
above.
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 as shown on attached SCHEDULE
211), free and clear of liens, claims, and encumbrances of any kind or
character.
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STOCK PURCHASE AGREEMENT PAGE 6
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Section 2.12 ASSETS OF THE COMPANY.
(a) SCHEDULE 2.12(a) attached hereto contains a complete and
correct description of all real property owned by or leased to the Company or in
which the Company otherwise holds contractual rights, together with all
applicable real property leases and contracts (the "Company Real Estate"). All
such leases and contracts are valid and in full force and effect and all rents,
royalties, and other sums payable by the Company thereunder have been timely
paid. There exists no default or event or circumstance which, with notice or
lapse of time or both, will constitute a default under any of such lease
agreements.
(b) SCHEDULE 2.12(b) attached hereto contains a complete and
accurate description of all vehicles, equipment, furniture, fixtures, and other
personal property of any kind or character, tangible or intangible, that is
owned by, in the possession of, or used by the Company in connection with the
Company's business. Except as shown on SCHEDULE 2.12(b), no personal property
owned or used by the Company in connection with its business is held under any
lease, security agreement, conditional sales contract, or other title retention
or financing agreement or is located any place other than in the possession of
the Company.
Section 2.13 TITLE TO AND CONDITION OF 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. The
tangible assets of the Company are in good operating condition and repair,
normal wear and tear excepted.
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 December 31 for
federal income tax purposes. The Company has filed all state and federal Tax
Returns (defined below) required to be filed by them, and the Company has paid
and discharged all Taxes (as defined below) shown due thereon and have paid all
other Taxes as are due. The liability for Taxes set forth in each such Tax
Return does not materially understate the Taxes required to be reflected on such
Tax Return. For purposes of this Agreement, "Tax" or "Taxes" means taxes of any
kind, payable to any federal, state, local, or foreign taxing authority,
including (without limitation) (i) income, franchise, profits, gross receipts,
ad valorem, value added, sales, use, service, real or personal property,
payroll, withholding, employment, social security, unemployment compensation,
and production taxes, and (ii) interest, penalties, and additions to tax imposed
with respect thereto, whether disputed or not; and "Tax Returns" means all
returns, reports, declarations, claims for refund, and information statements
with respect to Taxes required to be filed with the Internal Revenue Service or
any other taxing authority, domestic or foreign, through the time of Closing
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STOCK PURCHASE AGREEMENT PAGE 7
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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 the Company or any officers (and employees
responsible for Tax matters) of the Company have knowledge.
Section 2.15 ENVIRONMENTAL MATTERS.
(a) The Company has conducted all operations and activities in
material compliance with all applicable Environmental Laws (as defined below),
and none of the assets of the Company is being or has been operated in violation
of any Environmental Laws.
(b) The Company possesses all permits required under
Environmental Laws for the operation of its assets.
(c) The assets of the Company, and the operations conducted
thereon or therewith, are not subject to any existing, unfulfilled
administrative or judicial order requiring remedial action under any
Environmental Law.
(d) Neither Seller nor the Company has received any notice of
any investigation or inquiry regarding failure of the assets of the Company, or
the operations conducted thereon or therewith, to comply with Environmental
Laws.
As used in this Section 2.15, "Environmental Laws" shall mean the
federal Comprehensive Environmental Response, Compensation and Liability Act, as
amended, the Superfund Amendments and Reauthorization Act, as amended, Safe
Drinking Water Act, Texas Solid Waste Disposal Act, the Resource Conservation
and Recovery Act, as amended, the Hazardous and Solid Waste Amendments Act, as
amended, the Toxic Substances Control Act, as amended, the Clean Water Act, as
amended, and the Clean Air Act, as amended, and any other applicable federal,
state, or local environmental law and all rules, regulations and administrative
orders related thereto, as such laws, rules, regulations and administrative
orders exist as of the Closing Date.
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STOCK PURCHASE AGREEMENT PAGE 8
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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. All of the Contracts are in full force and
effect and the Company is not in default under any of the Contracts.
Section 2.18 NO UNION CONTRACTS. There is no collective bargaining or
other union agreement to or by which the Company is a party or is bound, nor is
a collective-bargaining agreement currently being negotiated; and all non-exempt
employees have been paid in accordance with the Fair Labor Standards Act of 1938
and the Portal-to-Portal Act of 1947. The Company is in compliance with all
federal, state, or other applicable laws, domestic or foreign, respecting
employment and employment practices, terms and conditions of employment, and
wages and hours, and has not and is not engaged in any unfair labor practice.
The Company has not experienced any material labor difficulty during the last
three years.
Section 2.19 INSURANCE. SCHEDULE 2.19 attached hereto lists all
insurance policies (the "Insurance Policies") held by the Company and all such
listed policies are in the respective principal amounts set forth therein. The
Company maintains (a) insurance on all of its business, operations, and assets
of a type customarily insured, covering property damage and loss of income by
fire or other casualty and (b) insurance protection against all liabilities,
claims, and risks against which it is customary to insure. All premiums due and
payable under the Insurance Policies have been paid. The Company is not, and but
for a requirement that notice be given or that a period of time elapse or both
would not be, in violation under any such Insurance Policies.
Schedule 2.20 BANK ACCOUNTS. SCHEDULE 2.20 attached hereto contains a
true and correct list of the names and addresses of all banks, financial
institutions, and other depositories in which the Company has an account,
deposit, or safe deposit box and the names of all persons authorized to draw on
those accounts or deposits or who have access to them and the account numbers of
each account.
Schedule 2.21 OTHER LIABILITIES AND OBLIGATIONS. SCHEDULE 2.21 attached
hereto contains a true and correct list of all liabilities and obligations of
the Company not disclosed elsewhere in this Agreement of any kind, character,
and description, whether accrued, absolute, contingent, or otherwise, and
whether or not required to be disclosed or accrued in the financial statements
of the Company that exceed $5,000 to any one creditor. In the case of
liabilities that may not be fixed, an estimate of the maximum amount that may be
payable is also included.
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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. The Company is not a party
to any transaction, contract, or agreement with any (i) current or former
officer or director of the Company or (ii) any parent, spouse, child, brother,
sister or other family relation of any such officer or director, or (iii) any
corporation or partnership of which any such officer or director or any such
family relation is an officer, director, partner or greater than 10% stockholder
(based on percentage ownership of voting stock) or (iv) any "affiliate", or
"associate" of any such persons or entities (as such terms are defined in the
rules and regulations promulgated under the Securities Act of 1934, including,
without limitation, any transaction involving a contract, agreement, or other
arrangement providing for the employment of, furnishing of materials, products,
or services by, rental of real or personal property from, or otherwise requiring
payments to, any such person or entity, except with respect to services provided
on reasonable terms which would not materially alter the presentation of the
Financial Statements, if such transactions had been entered into with an
unrelated third party.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as of the date of
this Agreement as follows:
Section 3.01 ORGANIZATION AND QUALIFICATION. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware. Purchaser is duly qualified or licensed to do business and is in good
standing in each jurisdiction where the character of the assets owned or
operated by Purchaser or the nature of its activities makes such qualification
or licensing necessary.
Section 3.02 AUTHORITY RELATIVE TO THIS AGREEMENT. Purchaser has the
requisite corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Purchaser
and the consummation by Purchaser of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Purchaser are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Purchaser and, assuming the due
authorization, execution and delivery by all other parties hereto, constitutes
the legal, valid and binding obligation of Purchaser, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
now or
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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, 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;
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(b) maintain and keep in full force and effect all of the
Contracts and all permits, licenses and similar rights and privileges of the
Company and each subsidiary of the Company and comply in all material respects
with all of its material obligations therein and thereunder;
(c) maintain all of its tangible assets in at least as good a
condition as they were in at the date hereof, ordinary wear and tear excepted,
and remove no material items therefrom;
(d) maintain the Insurance Policies in full force and effect;
and
(e) pay, perform, and discharge, on a basis consistent with
the Company's prior practices, all obligations of the Company under the notes,
leases, and other instruments evidencing the indebtedness or other liabilities
of the Company which are shown on the Preliminary Audited Balance Sheet and/or
on the schedules attached to this Agreement in accordance with their respective
terms (but without right of prepayment);
Section 4.02 RESTRICTED ACTIONS. Without the prior written consent of
Purchaser, such consent not to be unreasonably withheld, and except as otherwise
expressly provided by 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.
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STOCK PURCHASE AGREEMENT PAGE 12
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Section 4.07 NO DEFAULT. The Company will not knowingly take any action
or knowingly take any action that causes a material breach of any
representation, warranty, covenant or agreement of the Company under this
Agreement.
Section 4.08 INVESTMENT. The Company will not make any new capital
investment in, make any loan to, or acquire the securities or assets of any
other person or entity.
Section 4.09 USES OF CASH. Other than in the ordinary course of
business, the Company will not make any payments during the period between the
date hereof and the Closing Date except for the purpose of paying Taxes, paying
rentals or other sums owing by the Company under the Contracts as and when due,
discharging rentals and trade payables incurred in the ordinary course of
business, and retiring or discharging presently existing indebtedness to
financial institutions or other third parties as and when due in accordance with
the terms of the notes or other instruments evidencing such indebtedness (but
without right of prepayment).
ARTICLE V
OTHER AGREEMENTS OF THE PARTIES
Section 5.01 ENVIRONMENTAL REPORT. Within forty-five (45) days from the
date of this Agreement, Seller and the Company, at Seller's expense, shall
furnish to Purchaser a Phase I environmental study and report covering all of
the Company Real Estate and prepared by an environmental consulting firm
mutually acceptable to Seller and Purchaser (the "Environmental Report"). If the
Environmental Report shows any environmental condition that is unacceptable to
Purchaser, Purchaser shall, within ten (10) days of its receipt of the
Environmental Report, notify Seller of such condition(s) and the reasons for
Purchaser's objections thereto ("Purchaser's Environmental Objections"). Upon
expiration of such ten-day notification period, Purchaser shall be deemed to
have accepted the form and substance of the Environmental Report, except,
however, those matters to which Purchaser has timely objected in accordance with
the preceding sentence. Seller shall have no obligation to bring any action or
proceeding or otherwise to incur any expense whatsoever to eliminate or modify
any of Purchaser's Environmental Objections. Within five days following receipt
of Purchaser's Environmental Objections, Seller shall give notice to Purchaser
of what actions, if any, that Seller proposes to take in order to cure
Purchaser's Environmental Objections. If Seller is unable or unwilling to remedy
Purchaser's Environmental Objections to the reasonable satisfaction of
Purchaser, Purchaser may terminate this Agreement by notice in writing to Seller
by the earliest to occur of (i) the Closing Date or (ii) five (5) business days
following notice from Seller that it is unable or unwilling to remedy
Purchaser's Environmental Objections, in which event, except as expressly
provided otherwise in this Agreement, none of the parties hereto shall have any
further rights or obligations under this Agreement. If this Agreement is
terminated for any reason, Purchaser agrees to immediately return the Current
Environmental Report to the Company and to hold the contents thereof strictly
confidential. Likewise, pending and following Closing
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STOCK PURCHASE AGREEMENT PAGE 13
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hereunder, Seller, shall hold the Environmental Report strictly confidential and
shall not disclose the same or its contents to any third party without the prior
written consent of Purchaser.
Section 5.02 PURCHASER'S 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 5.03 EXCLUSIVE DEALING. Unless and until this Agreement shall
have been terminated in accordance with the terms hereof, neither Seller nor the
Company shall directly or indirectly, solicit, initiate, or participate in
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than the Purchaser or an affiliate or an
associate of the Purchaser) concerning, or enter into any agreement providing
for any sale of the assets of the Company, any sale of shares of capital stock
in the Company, or any similar transactions involving the Company.
Section 5.04 CONSENTS, APPROVALS, AND FILINGS. Seller, the Company, and
Purchaser shall each use its reasonable efforts to obtain at the earliest
practicable date and, in any event, prior to the Closing Date, all consents and
approvals, including any third party consents, and to make all filings required
to be obtained or made under any federal, state, or local laws or any agreement
or other instrument (including, without limitation, any consent or approval
necessary to avoid the loss of any rights under any agreement) prior to
consummating the transactions contemplated hereby, whether such consent,
approval or filing is to be obtained from or made with private parties or
applicable governmental authorities.
Section 5.05 BROKERS AND FINDERS. Purchaser, on the one hand, and
Seller and the Company, on the other hand, shall indemnify each other and hold
each other harmless from any
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STOCK PURCHASE AGREEMENT PAGE 14
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claim against the other for a broker's or finder's fee, commission, or other
like payment in connection with the transactions contemplated by this Agreement
which arises from or is based upon arrangements made by or through the
indemnifying party.
Section 5.06 PUBLIC ANNOUNCEMENTS. Pending Closing, except as may be
required by applicable law, no party hereto shall issue any press release or
make any other public pronouncements concerning this Agreement or the
transactions contemplated hereby without the written consent and approval of all
other parties.
Section 5.07 RESIGNATION OF OFFICERS AND DIRECTORS. Seller and the
Company will secure the resignation of each then-serving officer and director of
the Company effective as of the Closing Date.
Section 5.08 NOTICE OF DEVELOPMENTS. Prior to the Closing, Seller and
the Company will give prompt notice to Purchaser of any material event affecting
the assets, liabilities, business, financial condition, operations, results of
operations, or future prospects of the Company. No disclosure pursuant to this
Section 5.08 shall, however, be deemed to amend or supplement this Agreement or
the schedules hereto or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant under this Agreement.
Section 5.09 PRELIMINARY AND FINAL COMPUTATIONS OF NFA. As part of its
diligence processes in this transaction, 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"), all at the expense of
Purchaser. Sellers, the Company, and Purchaser recognize that the financial data
necessary to permit computation of NFA at the Closing may not be complete or
final at such time. The parties accordingly shall estimate NFA at Closing and
shall then 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 Sellers a preliminary settlement
statement, reflecting its good faith estimate of NFA as of the Closing Date
based upon the best information then available to Purchaser. At or prior to
Closing, Sellers and Purchaser shall attempt to reconcile any differences they
may have regarding the preliminary settlement statement. 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 Sellers
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. Sellers shall have ten
(10) days from its receipt of the such balance sheet and proposed settlement
statement to notify Purchaser of their objections, if any, to the information
set forth therein, failing which Sellers shall be deemed to have irrevocably
accepted the computations and substance of those documents for all purposes of
this Agreement. If Sellers timely and properly contest any items within such
balance sheet or proposed final settlement statement, Sellers and Purchaser
shall promptly meet and utilize their best efforts to resolve their
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STOCK PURCHASE AGREEMENT PAGE 15
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differences, it being the intention of the parties to finalize all post-Closing
adjustments within sixty (60) days following the Closing Date. If the parties
are unable to reach final agreement on any such post-Closing matters, they shall
resolve their differences by means of the dispute resolution procedures set
forth in Section 10.03 and final settlement between the parties shall be
deferred pending conclusion of such procedures. At the conclusion of the
post-Closing accounting contemplated by this Section 5.09, Sellers 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 RECEIVABLES. Seller expressly represents and warrants that
all receivables 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 (save and except to the extent any portion thereof is
expressly reserved for as bad debt in the Final Balance Sheet). 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, without limitation of its other legal
rights and remedies, may require Seller to immediately purchase the same from
the Company at full face value and without subsequent recourse of any kind upon
the Company or Purchaser or may offset the face amount of such unpaid
receivables against Purchaser's payment obligations under the Note.
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 and
including the Closing Date, except that, if Closing occurs, Purchaser shall be
responsible for the timely preparation and filing of the federal income tax
returns of the Company for calendar year 2000 and ensuing years and the Texas
state franchise tax returns of the Company due on or before May 15, 2001 and
ensuing years. Seller shall prepare all such Tax Returns for which Seller is
responsible in accordance with applicable law and shall submit such Tax Returns
to the Company and Purchaser for their review and concurrence at least ten (10)
business days prior to filing. If, after the Closing Date, any applicable taxing
authority shall determine there to be a deficiency in the amount of any federal,
state, or local Tax paid or payable by the Company which is not reserved for or
reflected on the Final Balance Sheet and which relates to any period prior to
the Closing Date, Seller shall be fully responsible for the payment of any such
deficiency. 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 and not severally 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. The Company shall have
exclusive authority to conduct all discussions and negotiations with applicable
taxing authorities regarding Tax Returns relating to
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STOCK PURCHASE AGREEMENT PAGE 16
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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 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 on 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 in
this Agreement or in any schedule hereto; and
(iii) All demands, assessments, judgments, costs, and
expenses (including reasonable legal fees and other expenses of
litigation, both at the trial and appellate level) 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 in this Agreement
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 5.12 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.
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STOCK PURCHASE AGREEMENT PAGE 17
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Section 5.13 RELEASE OF PERSONAL GUARANTIES. Upon Closing, Purchaser
shall cooperate fully with Seller and shall utilize its best efforts in
attempting to obtain the prompt release by applicable third parties of the
personal guaranties by Seller of indebtedness of the Company which are shown on
attached SCHEDULE 5.13.
Section 5.14 INVESTMENT REPRESENTATIONS BY SELLER. 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 5.14 and the exemptions from the
registration requirements of the Securities Acts
providing for issuance of securities not involving a
public offering;
(b) Seller will acquire any Stock for Seller's own
account, for investment, and not with a view to the
resale or distribution thereof;
(c) Seller will not transfer, sell or offer for sale any
portion of the Stock unless there is an effective
registration or other qualification relating thereto
under the Securities Act of 1933 and under any
applicable state securities laws or unless the holder
of the Stock delivers to Purchaser an opinion of
counsel, satisfactory to Purchaser, that such
registration or other qualification under such Act
and applicable state securities laws is not required
in connection with such transfer, offer or sale;
(d) Except as provided in Section 5.15, 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;
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STOCK PURCHASE AGREEMENT PAGE 18
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(g) Xxxxxx X. Best is an "accredited investor," as
defined in Regulation D as promulgated under the
Securities Act of 1933, as amended, (the "1933 Act");
and
(h) the provisions of this Section 5.14 shall survive the
Closing without time limitation.
Section 5.15 REGISTRATION OF THE STOCK. As a material consideration of
this Agreement to Seller, and notwithstanding any provisions of this Agreement
to the contrary, Purchaser agrees that, within one (1) year following any
issuance of the Stock to Seller, Purchaser will cause such stock to be
registered under the 1933 Act and any other applicable state securities laws at
the sole cost and expense of Purchaser.
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 in all material respects 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, Xxxx X. Xxxxxx, 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
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STOCK PURCHASE AGREEMENT PAGE 19
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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.
Section 6.08 CERTIFICATES. Seller and the Company shall have delivered
to Purchaser certificates confirming the continuing validity of their
representations and warranties pursuant to Section 6.01 and certifying their
performance hereunder as contemplated by Section 6.02.
Section 6.09 TITLE POLICY/WRITTEN LEASE AGREEMENTS. Seller and the
Company shall have (a) delivered to Purchaser, at their expense, an owner's
policy or policies of title insurance issued by a national title insurer
insuring the title of the Company to any of the Company Real Estate which is
owned by the Company in respective amounts not less than the current ad valorem
tax valuations of each parcel comprising the same, free and clear of liens,
claims, and encumbrances other than liens for ad valorem taxes not yet due,
standard printed form exceptions, and any existing mineral reservations,
easements, and restrictions which are not such as to materially interfere with
or materially impair the current use, operation, or value of such Company Real
Estate; and (b) to the extent any leases of Company Real Estate may be verbal,
shall have caused such lease arrangements to be evidenced by written lease
agreements in form and substance duly satisfactory to Purchaser, duly executed
by the owners of the properties, as lessor, and the Company, as tenant.
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
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STOCK PURCHASE AGREEMENT PAGE 20
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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.
Section 7.06 CERTIFICATES. Purchaser shall have delivered to Seller and
the Company certificates confirming the continuing validity of its
representations and warranties pursuant to Section 7.01 and certifying its
performance hereunder as contemplated by Section 7.02.
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 May 1,
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;
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(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 E;
(e) Xxxxxxx Xxxxxxxxx and Purchaser shall execute and deliver
an employment agreement which is substantially identical in form and substance
to that attached hereto as EXHIBIT F;
(f) Seller and Purchaser shall execute and deliver a
non-competition agreement which is substantially identical in form and substance
to that attached hereto as EXHIBIT G;
(g) At the option of Purchaser, Seller and the Company shall
execute and deliver a lease agreement covering the "Kingsville Yard" that is
substantially identical in form and substance to that attached hereto as EXHIBIT
H;
(h) The parties shall attempt to agree upon an estimate of NFA
and shall execute a preliminary closing statement as contemplated by Section
5.09;
(i) Purchaser shall pay to Seller by wire transfer the cash
portion of the Purchase Price payable at Closing pursuant to Section 1.03(1);
(j) Purchaser shall execute and deliver the Note to Seller;
(k) The Company and Seller shall execute and deliver the
Security Documents;
(l) Purchaser shall deliver to Seller its closing certificate
in compliance with the provisions of Section 7.06; and
(m) 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.
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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 May 1, 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 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.
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STOCK PURCHASE AGREEMENT PAGE 23
24
(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 sum of
$50,000.00 from Purchaser as liquidated damages and not a penalty for the breach
hereof by Purchaser (the same as if Purchaser had deposited such sum with Seller
as a down payment or xxxxxxx money hereunder). In this regard, the parties
acknowledge and agree that the damages occasioned to Seller and the Company by
any such breach are difficult of ascertainment or calculation and that the
specified sum of liquidated damages represents a fair and reasonable estimate of
such damages.
(b)(2) Default by Seller and/or the Company. If Seller and/or
the Company fails or refuses to close in accordance with the terms of this
Agreement and if Purchaser has timely satisfied all the conditions to
Purchaser's obligation to close hereunder and is not in default hereunder,
Purchaser shall have the right either (i) to declare this Agreement canceled or
(ii) to seek enforcement of this Agreement at law or in equity, including,
without limitation, an action for specific performance of the terms of this
Agreement by Seller and the Company or for recovery of the actual damages
occasioned to Purchaser by such breach. The provisions of Section 10.03 hereof
shall have no application to any claim or action by Purchaser under this Section
9.02(b)(2).
(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).
ARTICLE X
POST CLOSING REMEDIES
Section 10.01 SURVIVAL/THRESHOLD. The parties agree that, except as
otherwise specifically provided in this Agreement, all of the representations,
warranties and covenants contained in this Agreement or in any document,
certificate, instrument, schedule or exhibit delivered pursuant to this
Agreement shall survive the Closing only for a period of two (2) years from and
after the Closing Date unless the party claiming a breach shall assert the same
by written notice to the other party within such two-year period; provided,
however, that the representations and warranties of Seller under Sections
2.01-2.04, 2.11, and 2.14, the representations and warranties of Purchaser in
Sections 3.01 and 3.02, the covenants of the parties in Section 5.10, the
provisions of this Article X and of Article XI, and the covenants of
indemnification for any breach of the foregoing under Section 5.11 shall survive
Closing without time limitation. Notwithstanding anything in this Agreement to
the contrary, Seller will have no liability to Purchaser for the breach or
inaccuracy of any of its representations or warranties under this Agreement
unless the total of all damages incurred by Purchaser as a consequence of such
breaches exceeds $50,000.
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STOCK PURCHASE AGREEMENT PAGE 24
25
Section 10.02 OFFSET/WAIVER. Subject to the provisions of Sections
10.01 and 10.03, after the Closing, Purchaser, without limitation of its other
rights and remedies, shall have recourse upon the Escrowed Funds and 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 10.03 DISPUTE RESOLUTION.
(a) Unless expressly provided otherwise in this Agreement, any
and all claims, disputes, controversies, and other matters in question involving
the parties hereto and arising out of or relating to this Agreement and the
transactions contemplated hereby, any provision hereof, the alleged breach of
such provision, or in any way relating to the subject matter of this Agreement
(collectively, "Disputes"), whether such Disputes sound in contract, tort, or
otherwise, at law or in equity, under State or federal law, whether provided by
statute or common law, for damages or any other relief, shall be resolved in
accordance with this Section 10.03.
(b) The parties shall attempt in good faith to resolve any
Dispute promptly by negotiations between representatives who have authority to
settle the controversy. Any party may give the other party written notice of any
Dispute not resolved in the normal course of business, together with a request
that the parties meet and confer ("Notice of Dispute"). Within fifteen (15) days
after delivery of a Notice of Dispute, the parties or their representatives
shall meet at a mutually acceptable time and place, and thereafter as often as
they reasonably deem necessary, to exchange relevant information and to attempt
to resolve the Dispute. If the matter has not been resolved within thirty (30)
days after delivery of the Notice of Dispute, or if the parties fail to meet
within fifteen (15) days after delivery of the Notice of Dispute, either party
may initiate mediation of the claim or dispute as provided hereafter. If a party
or its representative intends to be accompanied at a meeting by an attorney, the
other parties shall be given advance notice of such intention and may also be
accompanied by an attorney. All negotiations pursuant to this clause are
confidential and shall be treated as compromise and settlement negotiations for
purposes of the Federal Rules of Evidence and any state's rules of evidence.
(c) If a Dispute has not been resolved by negotiation as
provided in Section 10.03(b), the parties shall endeavor to settle the claim or
dispute by mediation under the Center for Public Resources ("CPR") Model
Procedure for Mediation of Business Disputes. A neutral third party will be
selected from the CPR panel of neutrals. If the parties encounter difficulty in
agreeing on a neutral third party, they will seek the assistance of CPR in the
selection process. Mediation under this Section 10.03(c) will commence within
sixty (60) days of the Notice of Dispute.
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STOCK PURCHASE AGREEMENT PAGE 25
26
(d) If the Dispute has not been resolved by non-binding means
pursuant to Sections 10.03(b) or (c) within thirty (30) days of the initiation
of mediation, either party may submit such Dispute for resolution by binding
arbitration as follows:
(i) It is the intention of the parties that the
arbitration shall be conducted pursuant to
the Texas Arbitration Act, Tex. Civ. Prac. &
Rem. Code Xxx., Sections 171.001 et seq.
(Xxxxxx 1997 & Supp. 1999) (the "Act"), as
modified by this Agreement. The validity,
construction, and interpretation of this
Section 10.03(d), and all procedural
aspects of the arbitration conducted
pursuant to this Section 10.03(d),
including, but not limited to, the
determination of issues that are subject to
arbitration (i.e. arbitrability), the scope
of the arbitrable issues, allegations of
fraud in the inducement to enter into this
Agreement, or this arbitration provision,
allegations of waiver, laches, delay, or
other defenses to arbitrability, and the
rules governing the conduct of the
arbitration (including the time for filing
an answer, the time for filing
counterclaims, the times for amending
pleadings, the specificity of the pleadings,
the extent and scope of discovery, the
issuance of subpoenas, the times for
designation of experts, whether the
arbitration is to be stayed pending
resolution of related litigation involving
third parties not bound by this Agreement,
the receipt of evidence and the like), shall
be decided by the arbitrators. The
arbitration shall be administered by the
American Arbitration Association ("AAA"),
and shall be conducted pursuant to the
Commercial Arbitration Rules of the AAA, as
modified by this Agreement. Notwithstanding
any provision of this Agreement to the
contrary, the parties expressly agree that
the arbitrators shall have absolutely no
authority to award incidental, special,
treble, exemplary, or punitive damages of
any type under any circumstances regardless
of whether such damages may be available
under Texas law, the law of any other state,
or federal law, or under the Act, or the
Commercial Arbitration Rules of the AAA, the
parties hereby waiving their right, if any,
to recover incidental, special, treble,
exemplary, or punitive damages in connection
with any such Disputes.
(ii) The arbitration proceeding shall be
conducted in Midland, Texas before a panel
of three (3) arbitrators appointed in
accordance with the Commercial Arbitration
Rules of the AAA. The arbitrators shall
conduct a hearing as soon as reasonably
practicable after appointment of the third
arbitrator, and a final decision completely
disposing of all Disputes that are the
subject of the arbitration proceedings shall
be rendered by the arbitrators as soon as
reasonably practicable after the hearing.
There shall be no transcript of the hearing
before the
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STOCK PURCHASE AGREEMENT PAGE 26
27
arbitrators. The arbitrators' ultimate
decision after final hearing shall be in
writing, but shall be as brief as possible,
and the arbitrators shall not assign reasons
for their ultimate decision.
(iii) The fees and expenses of the arbitrators
shall be borne equally by the parties, but
the decision of the arbitrators may include
such award of the arbitrators' fees and
expenses and of other costs and attorneys'
fees as the arbitrators determine
appropriate.
(iv) To the fullest extent permitted by law, the
arbitration proceeding and the arbitrators'
award shall be maintained in confidence by
the parties.
(v) The award of the arbitrators shall be
binding upon the parties and final and
nonappealable to the maximum extent
permitted by law, and judgment thereon may
be entered by a court of competent
jurisdiction and enforced by any party as a
final judgment of such court.
(e) All applicable statutes of limitation and defenses based
upon the passage of time shall be tolled while the procedures specified in
Sections 10.03(b) and (c) are pending. The parties will take such actions, if
any, as may be required to effectuate such tolling.
(f) Each party is required to continue to perform its
obligations under this Agreement pending final resolution of any Dispute covered
by this Article X.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 AMENDMENT AND MODIFICATION. Subject to applicable law,
this Agreement may be amended, modified, or supplemented only by writing duly
executed by all of the parties hereto.
Section 11.02 WAIVER OF COMPLIANCE. Any failure of the Seller or the
Company, on the one hand, or Purchaser, on the other, to comply with any
obligation, covenant, agreement or condition contained herein may be expressly
waived in writing by Purchaser or Seller and the Company, 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 27
28
(a) if to Seller or the Company (only until the Closing Date),
to:
Xx. Xxxxxx X. Best
TAT (Turn Around Trucking), Inc.
000 X. Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
Telephone: (____) _______
Fax: (____) _____________
with a copy to:
Xxxx X. Xxxxxx
0000 X.X. Xxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
or to such other person or addresses as Seller or the Company shall furnish
Purchaser in writing in accordance with this Section 11.03; and
(b) if to Purchaser (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.
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).
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STOCK PURCHASE AGREEMENT PAGE 28
29
Section 11.04 EXPENSES. Purchaser shall pay its own fees and expenses,
including, without limitation, professional fees and expenses, incurred in
connection with the negotiation, execution, and performance of this Agreement
and the transactions contemplated hereby. All fees and expenses of Seller and
all fees and expenses of the Company for periods to and including the Closing
Date, 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 11.05 BINDING NATURE; NO THIRD PARTY BENEFICIARIES. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. Nothing contained herein, express or implied, is intended to confer on
any person other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
Section 11.06 GOVERNING LAW. This Agreement, and the legal relations
among the parties hereto arising from this Agreement, shall be governed by and
construed in accordance with the laws of the State of Texas, without regard to
its conflicts of laws rules.
Section 11.07 ENTIRE AGREEMENT. This Agreement (including the exhibits
and schedules hereto and the other instruments referred to herein) embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
warranties, covenants or undertakings, other than those expressly set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such subject matter.
Section 11.08 HEADINGS. The headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 11.09 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
Section 11.10 SEVERABILITY. If any provision of this Agreement is held
to be illegal, invalid, or unenforceable under present or future law, such
provision shall be fully severable and this Agreement shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part hereof, and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid, or unenforceable provision, there shall be added
automatically, as part of this Agreement, a provision as similar in terms and
substance to such illegal, invalid, or unenforceable provision as may be
possible and legal, valid, and enforceable.
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STOCK PURCHASE AGREEMENT PAGE 29
30
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/ XXXXXX X. BEST
-----------------------------------
XXXXXX X. BEST
/s/ XXX XXXXXX
-----------------------------------
XXX XXXXXX, TRUSTEE OF THE
BEST CHILDREN'S TRUST
THE COMPANY:
TAT (TURN AROUND TRUCKING),
INC., a Texas corporation
By: /s/ XXXXXX X. BEST
--------------------------------
Printed Name: XXXXXX X. BEST
----------------------
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-1 THE DEED OF TRUST
EXHIBIT B-2 THE SECURITY AGREEMENT
EXHIBIT C THE ESCROW AGREEMENT
EXHIBIT D THE FINANCIAL STATEMENTS
EXHIBIT E THE BEST EMPLOYMENT AGREEMENT
EXHIBIT F THE XXXXXXXXX EMPLOYMENT AGREEMENT
EXHIBIT G NON-COMPETITION AGREEMENT
EXHIBIT H 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(a) REAL PROPERTY
SCHEDULE 2.12(b) PERSONAL PROPERTY
SCHEDULE 2.13 EXISTING LIENS
SCHEDULE 2.17 CONTRACTS
SCHEDULE 2.19 INSURANCE POLICIES
SCHEDULE 2.20 BANK ACCOUNTS
SCHEDULE 2.21 OTHER LIABILITIES
SCHEDULE 5.13 PERSONAL GUARANTIES OF SELLER
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STOCK PURCHASE AGREEMENT PAGE 31
32
EXHIBIT A
SECURED PROMISSORY NOTE
$1,300,000.00 Kingsville, Texas ____________, 2000
FOR VALUE RECEIVED, the undersigned, SIERRA WELL SERVICE, INC., a
Delaware corporation ("Maker"), promises to pay to the order of XXXXXX X. BEST,
AS COLLECTION AGENT FOR XXXXXX X. BEST, INDIVIDUALLY, AND XXX XXXXXX TRUSTEE OF
THE BEST CHILDREN'S TRUST, ("Payee") at 000 X. Xxxxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxx 00000, the principal sum of ONE MILLION THREE HUNDRED THOUSAND AND NO/100
DOLLARS ($1,300,000.00), together with interest on the unpaid principal balance
from day to day outstanding prior to default or maturity at a floating per annum
rate which shall from quarter to quarter be 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). The interest rate on this Note shall initially be
determined as of the first Friday most immediately preceding the date of this
Note that is a business day (the "Initial Determination Date") and shall
thereafter be redetermined quarterly until maturity based upon the Prime Rate in
effect as of the first Friday most immediately preceding each ensuing calendar
quarter from the date hereof that is a business day (each such date being
hereinafter referred to as a "Redetermination Date"). Each change in the rate of
interest charged hereunder shall, subject to the terms hereof, become effective,
without notice to Maker, upon the applicable quarterly adjustment date (as
opposed to the Redetermination Date). 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 floating rate of interest
denominated and published as such by the Wall Street Journal on the Initial
Determination Date and thereafter on each applicable Redetermination Date.
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. To the extent that
Chapter 303 of the Texas Finance Code, as amended, is relevant for purposes of
determining the Maximum Rate, Payee hereby notifies Maker that the applicable
rate ceiling shall be the "applicable interest rate ceiling" from time to time
in effect, as limited by Section 303.009 of the Texas Finance Code, as amended;
provided, however, that to the extent permitted by applicable law, Payee
reserves the right to change the applicable rate ceiling from time to time by
further notice to Maker; and, provided further, that the Maximum Rate shall not
be limited to the applicable interest rate ceiling under Chapter 303 if federal
laws or other state laws now or hereafter in effect and applicable to this Note
(and the interest contracted for, charged and collected hereunder) shall permit
a higher rate of interest.
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STOCK PURCHASE AGREEMENT PAGE 32
33
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 TAT (Turn Around Trucking), Inc., as Grantor, and Payee, as
Secured Party, covering all of the collateral 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.
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 or payment in full of this Note, whether stated or by acceleration,
(the "Sierra IPO"), Maker and Payee agree to convert the unpaid balance of this
Note to unregistered common stock in Maker at a per share price equivalent to
the per share price at which Maker issued its common stock in the Sierra IPO
within forty-five (45) days following successful conclusion of the Sierra IPO.
Maker and Payee shall effectuate such conversion of indebtedness for stock
through the delivery of this Note by Payee to Maker, marked "PAID," in return
for the delivery by Maker of the requisite number of shares of its unregistered
common stock to Payee.
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STOCK PURCHASE AGREEMENT PAGE 33
34
This Note is in all respects subject to that certain Stock Purchase
Agreement dated as of March 1, 2000, between Xxxxxx X. Best et al., as Seller,
TAT (Turn Around Trucking), Inc., as the Company, and Maker, as Purchaser.
This Note shall be governed by and construed in accordance with the
laws of the State of Texas.
SIERRA WELL SERVICE, INC.
By:
--------------------------------------
Printed Name:
----------------------------
Title:
-----------------------------------
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STOCK PURCHASE AGREEMENT PAGE 34
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 XXXXXX X. BEST,
INDIVIDUALLY, and XXX XXXXXX, TRUSTEE OF THE BEST CHILDREN'S TRUST
(collectively, "Seller"), TAT (TURN AROUND TRUCKING), INC., a Texas corporation
(the "Company"), and SIERRA WELL SERVICE, INC., a Delaware corporation
("Purchaser"), with reference to the following:
RECITALS
A. Seller, the Company, and Purchaser are parties to that certain Stock
Purchase Agreement (the "Agreement") dated as of March 1, 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/ XXXXXX X. BEST
-------------------------------------
XXXXXX X. BEST
/s/ XXX XXXXXX
-------------------------------------
XXX XXXXXX, TRUSTEE OF THE
BEST CHILDREN'S TRUST
THE COMPANY:
TAT (TURN AROUND TRUCKING),
INC., a Texas corporation
By: /s/ XXXXXX X. BEST
---------------------------------
Printed Name: XXXXXX X. BEST
------------------------
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
