Stock Purchase Agreement
between
WellTech Eastern, Inc.,
and
Xxxxxx X. Xxxxx
Dated as of November 18, 1997
Stock Purchase Agreement
This Stock Purchase Agreement (this Agreement) is entered into as of November
18, 1997, by and between WellTech Eastern, Inc., a Delaware corporation
(Buyer), and Xxxxxx X. Xxxxx (the Shareholder).
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WITNESSETH:
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Whereas, Buyer is a corporation duly organized and validly existing under the
laws of the State of Delaware, with its principal executive offices at Xxx Xxxxx
Xxxxxx, Xxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000; and
Whereas, Xxxxx Service Co. (the Company) is a corporation duly organized and
validly existing under the laws of the State of Oklahoma, with its principal
executive offices at 000 00xx, Xxxxxxxx, Xxxxxxxx 00000; and
Whereas, the Shareholder owns 1,000 shares (the Company Shares) of common
stock, par value $1.00 per share, of the Company (the Company Common Stock ),
which constitutes all of the issued and outstanding shares of capital stock of
the Company; and
Whereas, the Company owns all of the issued and outstanding shares of capital
stock of each of (i) Industrial Oilfield Supply, Inc., an Oklahoma corporation
(Industrial), (ii) Xxxxx Well Service, Inc., an Oklahoma corporation (Xxxxx)
and (iii) Xxxxx Transportation, Inc., an Oklahoma corporation (Transportation);
and
Whereas, Industrial, Xxxxx and Transportation are sometimes referred to
collectively herein as the Company Subsidiaries and individually as a Company
Subsidiary; and
Whereas, the Shareholder desires to sell to Buyer, and Buyer desires to purchase
from the Shareholder all of the issued and outstanding capital stock of the
Company.
Now, Therefore, in consideration of the premises and of the mutual covenants and
agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
Purchase and Sale
1.1. Purchase and Sale of the Company Shares. Subject to the terms and
conditions of this Agreement, on the date hereof, the Shareholder agrees to sell
and convey to Buyer, free and clear of all Encumbrances (as defined in Section
2.1.8.1 hereof), and Buyer agrees to purchase and accept from the Shareholder,
all of the Company Shares. In consideration of the sale of the Company Shares,
Buyer shall pay to the Shareholder $6,690,000 in cash by wire transfer of
immediately available funds, and the Cash Adjustment Payment (as defined in
Section 1.3 hereof), if any, in accordance with Section 1.4 hereof.
1.2. Delivery of the Company Certificates. The Shareholder shall deliver to
Buyer on the date hereof duly and validly issued certificate(s) representing all
of the Company Shares, each such certificate having been duly endorsed in blank
and in good form for transfer or accompanied by stock powers duly executed in
blank, sufficient and in good form to properly transfer such shares to Buyer.
1.4 Adjustment of Purchase Price. Buyer shall cause to be prepared and delivered
to the Shareholder a consolidated balance sheet of the Company and the Company
Subsidiaries as of the date hereof (the Final Balance Sheet) within 60 days
after the date hereof. Buyer and the Shareholder shall jointly review the Final
Balance Sheet, endeavor in good faith to resolve all disagreements regarding the
entries thereon and reach a final determination thereof within 90 days from the
date hereof. Within 10 days of reaching such final determination, the following
adjusting payments shall be made:
(1) If the sum of (A) the Final Net Current Value of the Company (defined
below) plus (B) $64,234.19, which represents the amount of funds expended
by the Company since the Balance Sheet Date (as defined in Section 2.1.6
hereof) for the purchase of capital equipment that the parties hereto have
agreed expands the capability of the Company's business (the Capital
Expenditure Amount), exceeds the 8/31 Net Current Value of the Company
(defined below), Buyer shall pay to the Shareholder the amount of such
excess (the Cash Adjustment Payment).
(2) If the sum of (A) the Final Net Current Value of the Company plus (B) the
Capital Expenditure Amount is less than the 8/31 Net Current Value of the
Company, the Shareholder shall pay to Buyer the amount of such difference.
The term Final Net Current Value of the Company means the dollar value of the
amount by which (i) the Total Current Assets plus the Total Other Assets as
recorded on the Final Balance Sheet exceeds (ii) the Total Liabilities as
recorded on the Final Balance Sheet. The term Net Current Value of the
Company means the dollar value of the amount by which (i) the Total Current
Assets plus the Total Other Assets as recorded on the 8/31 Balance Sheet (as
defined in Section 2.1.6 hereof) exceeds (ii) the Total Liabilities as recorded
on the 8/31 Balance Sheet.
ARTICLE 2
Representations and Warranties
2.1. Representations and Warranties of the Shareholder. The Shareholder
represents and warrants to Buyer as follows:
2.1.1. Organization and Standing. Each of the Company and the Company
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, has full requisite
corporate power and authority to carry on its business as it is currently
conducted, and to own and operate the properties currently owned and operated by
it, and is duly qualified or licensed to do business and is in good standing as
a foreign corporation authorized to do business in all jurisdictions in which
the character of the properties owned or the nature of the business conducted by
it would make such qualification or licensing necessary.
2.1.2. Agreement Authorized and its Effect on Other Obligations. The Shareholder
is a resident of Texas, above the age of 18 years, and has the legal capacity
and requisite power and authority to enter into, and perform his or her
obligations under this Agreement. This Agreement is a valid and binding
obligation of the Shareholder enforceable against the Shareholder (subject to
normal equitable principles) in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, debtor
relief or similar laws affecting the rights of creditors generally. The
execution, delivery and performance of this Agreement by the Shareholder will
not conflict with or result in a violation or breach of any term or provision
of, nor constitute a default under (i) the charter or bylaws of the Company or
(ii) any obligation, indenture, mortgage, deed of trust, lease, contract or
other agreement to which the Company or the Shareholder is a party or by which
the Company or the Shareholder or their respective properties are bound.
2.1.3. Capitalization. The authorized capitalization of the Company consists of
3,000 shares of Company Common Stock, of which, as of the date hereof, 1,000
shares (the Company Shares ) were issued and outstanding and held beneficially
and of record by the Shareholder. On the date hereof, the Company does not have
any outstanding options, warrants, calls or commitments of any character
relating to any of its authorized but unissued shares of capital stock. All
issued and outstanding shares of Company Common Stock are validly issued, fully
paid and non-assessable and are not subject to preemptive rights. None of the
outstanding shares of Company Common Stock is subject to any voting trusts,
voting agreement or other agreement or understanding with respect to the voting
thereof, nor is any proxy in existence with respect thereto. The authorized
capitalization of Industrial consists of 50,000 shares of common stock, par
value $1.00 per share (Industrial Common Stock ), of which, as of the date
hereof, 375 shares (the Industrial Shares ) were issued and outstanding and
held beneficially and of record by the Company. On the date hereof, Industrial
does not have any outstanding options, warrants, calls or commitments of any
character relating to any of its authorized but unissued shares of capital
stock. All issued and outstanding shares of Industrial Common Stock are validly
issued, fully paid and non-assessable and are not subject to preemptive rights.
None of the outstanding shares of Industrial Common Stock is subject to any
voting trusts, voting agreement or other agreement or understanding with respect
to the voting thereof, nor is any proxy in existence with respect thereto. The
authorized capitalization of Xxxxx consists of 25,000 shares of common stock,
par value $1.00 per share (Xxxxx Common Stock ), of which, as of the date
hereof, 500 shares (the Xxxxx Shares ) were issued and outstanding and held
beneficially and of record by the Company. On the date hereof, Xxxxx does not
have any outstanding options, warrants, calls or commitments of any character
relating to any of its authorized but unissued shares of capital stock. All
issued and outstanding shares of Xxxxx Common Stock are validly issued, fully
paid and non-assessable and are not subject to preemptive rights. None of the
outstanding shares of Xxxxx Common Stock is subject to any voting trusts, voting
agreement or other agreement or understanding with respect to the voting
thereof, nor is any proxy in existence with respect thereto. The authorized
capitalization of Transportation consists of 50,000 shares of common stock, par
value $1.00 per share (Transportation Common Stock ), of which, as of the date
hereof, 892.86 shares (the Transportation Shares ) were issued and outstanding
and held beneficially and of record by the Company. On the date hereof,
Transportation does not have any outstanding options, warrants, calls or
commitments of any character relating to any of its authorized but unissued
shares of capital stock. All issued and outstanding shares of Transportation
Common Stock are validly issued, fully paid and non-assessable and are not
subject to preemptive rights. None of the outstanding shares of Transportation
Common Stock is subject to any voting trusts, voting agreement or other
agreement or understanding with respect to the voting thereof, nor is any proxy
in existence with respect thereto.
2.1.4. Ownership of Shares. The Shareholder holds good and valid title to all of
the Company Shares, free and clear of all Encumbrances. The Shareholder
possesses full authority and legal right to sell, transfer and assign to Buyer
the Company Shares, free and clear of all Encumbrances. Upon transfer to Buyer
by the Shareholder of the Company Shares, Buyer will own the Company Shares free
and clear of all Encumbrances. There are no claims pending or, to the knowledge
of the Shareholder, threatened, against the Company or the Shareholder that
concern or affect title to the Company Shares, or that seek to compel the
issuance of capital stock or other securities of the Company. The Company holds
good and valid title to all of the Industrial Shares, the Xxxxx Shares and the
Transportation Shares, free and clear of all Encumbrances. There are no claims
pending or, to the knowledge of the Shareholder, threatened, against Industrial,
Xxxxx, Transportation or the Shareholder that concern or affect title to the
Industrial Shares, the Xxxxx Shares or the Transportation Shares, or that seek
to compel the issuance of capital stock or other securities of Industrial, Xxxxx
or Transportation.
2.1.5. No Subsidiaries. Other than the Company Subsidiaries, there is no
corporation, partnership, joint venture, business trust or other legal entity in
which the Company, either directly or indirectly through one or more
intermediaries, owns or holds beneficial or record ownership of at least a
majority of the outstanding voting securities.
2.1.6. Financial Statements. The Company has delivered to Buyer copies of the
consolidated unaudited balance sheet of the Company and the Company Subsidiaries
(the 8/31 Balance Sheet ) and related consolidated statement of income, copies
of each of which are attached hereto as Schedule 2.1.6 (collectively, the 8/31
Financial Statements ), as at and for the two(2) months ended August 31, 1997
(the Balance Sheet Date ). The 8/31 Financial Statements are complete in all
respects, except as hereinafter described. The 8/31 Financial Statements present
fairly the consolidated financial condition of the Company and the Company
Subsidiaries as at the dates and for the periods indicated, except as
hereinafter described. The 8/31 Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis, except that Federal and State income taxes were not accrued. The accounts
receivable reflected in the 8/31 Balance Sheet, or which have been thereafter
acquired by the Company or the Company Subsidiaries, have been collected or are
collectible at the aggregate recorded amounts thereof less applicable reserves,
which reserves are adequate. The inventories of the Company and the Company
Subsidiaries reflected in the 8/31 Balance Sheet, or which have thereafter been
acquired by them, consist of items of a quality usable and salable in the normal
course of their business, and the values at which inventories are carried are at
the lower of cost or market.
2.1.7. Liabilities. Except as disclosed on Schedule 2.1.7 hereto, neither the
Company nor any of the Company Subsidiaries has any liabilities or obligations,
either accrued, absolute or contingent, nor does the Shareholder have any
knowledge of any potential liabilities or obligations, other than those (i)
incurred in the ordinary course of business since the Balance Sheet Date that
would not adversely affect the value and conduct of the business of the Company
or any of the company Subsidiaries or (ii) reflected or reserved against in the
8/31 Balance Sheet.
2.1.8. Additional Company Information. Attached as
Schedule 2.1.8 hereto are true, complete and correct lists of the following
items:
2.1.8.1. Real Estate. All real property and structures thereon owned, leased or
subject to a contract of purchase and sale, or lease commitment, by the Company
or any of the Company Subsidiaries, with a description of the nature and amount
of any Encumbrances (defined below) thereon. The term Encumbrances means all
liens, security interests, pledges, mortgages, deed of trust, claims, rights of
first refusal, options, charges, restrictions or conditions to transfer or
assignment, liabilities, obligations, privileges, equities, easements,
rights-of-way, limitations, reservations, restrictions and other encumbrances of
any kind or nature;
2.1.8.2. Machinery and Equipment. All rigs, carriers, rig equipment, machinery,
transportation equipment, tools, equipment, furnishings, and fixtures owned,
leased or subject to a contract of purchase and sale, or lease commitment, by
the Company or any of the Company Subsidiaries with a description of the nature
and amount of any Encumbrances thereon;
2.1.8.3. Inventory. All inventory items or groups of inventory items owned by
the Company or any of the Company Subsidiaries, excluding raw materials and work
in process, which raw materials and work in process are valued on the 8/31
Balance Sheet, together with the amount of any Encumbrances thereon;
2.1.8.4. Receivables. All accounts and notes receivable of the Company or any of
the Company Subsidiaries, together with (i)aging schedules by invoice date and
due date, (ii)the amounts provided for as an allowance for bad debts, (iii)the
identity and location of any asset in which the Company or any of the Company
Subsidiaries holds a security interest to secure payment of the underlying
indebtedness, and (iv)a description of the nature and amount of any
Encumbrances on such accounts and notes receivable;
2.1.8.5. Payables. All accounts and notes payable of the Company or any of the
Company Subsidiaries, together with an appropriate aging schedule.
2.1.8.6. Insurance. All insurance policies (including title insurance policies)
or bonds currently maintained by the Company or any of the Company Subsidiaries,
including those covering the Company's (and the Company Subsidiaries)
properties, rigs, machinery, equipment, fixtures, employees and operations, as
well as a listing of any premiums, audit adjustments or retroactive adjustments
due or pending on such policies or any predecessor policies;
2.1.8.7. Contracts. All contracts, including leases under which the Company or
any of the Company Subsidiaries is lessor or lessee, which are to be performed
in whole or in part after the date hereof;
2.1.8.8. Employee Compensation Plans. All bonus, incentive compensation,
deferred compensation, profit-sharing, retirement, pension, welfare, group
insurance, death benefit, or other employee benefit or fringe benefit plans,
arrangements or trust agreements of the Company or any of the Company
Subsidiaries and any employee benefit plan maintained by the Company or any of
the Company Subsidiaries (collectively, Employee Plans ), together with copies
of the most recent reports with respect to such plans, arrangements, or trust
agreements filed with any governmental agency and all Internal Revenue Service
determination letters and other correspondence from governmental entities that
have been received with respect to such plans, arrangements or agreements;
2.1.8.9. Certain Salaries. The names and salary rates of all present employees
of the Company and all employees of each of the Company Subsidiaries, and, to
the extent existing on the date of this Agreement, all arrangements with respect
to any bonuses to be paid to them from and after the date of this Agreement;
2.1.8.10. Bank Accounts. The name of each bank in which the Company or any of
the Company Subsidiaries has an account and the names of all persons authorized
to draw thereon;
2.1.8.11. Employee Agreements. Any collective bargaining agreements of the
Company or any of the Company Subsidiaries with any labor union or other
representative of employees, including amendments, supplements, and written or
oral understandings, and all employment and consulting and severance agreements
of the Company and the Company Subsidiaries;
2.1.8.12. Intellectual Property. All patents, patent applications, trademarks
and service marks (including registrations and applications therefor), trade
names, copyrights and written know-how, trade secrets and all other similar
proprietary data and the goodwill associated therewith (collectively, the
Intellectual Property ) used by the Company or any of the Company Subsidiaries;
2.1.8.13. Trade Names. All trade names, assumed names and fictitious names used
or held by the Company or any of the Company Subsidiaries, whether and where
such names are registered and where used;
2.1.8.14. Licenses and Permits. All permits, authorizations, certificates,
approvals, registrations, variances, waivers, exemptions, rights-of-way,
franchises, ordinances, licenses and other rights of every kind and character
(collectively, the Permits ) of the Company and each of the Company
Subsidiaries under which they conducts their business.
2.1.8.15. Promissory Notes. All long-term and short-term promissory notes,
installment contracts, loan agreements, credit agreements, and any other
agreements of the Company or any of the Company Subsidiaries relating thereto or
with respect to collateral securing the same;
2.1.8.16. Guaranties. All indebtedness, liabilities and commitments of others
and as to which the Company or any of the Company Subsidiaries is a guarantor,
endorser, co-maker, surety, or accommodation maker, or is contingently liable
therefor and all letters of credit, whether stand-by or documentary, issued by
any third party;
2.1.8.17. Reserves and Accruals. All accounting reserves and accruals maintained
in the 8/31 Balance Sheet;
2.1.8.18. Leases. All leases to which the Company or any of the Company
Subsidiaries is a party; and
2.1.8.19. Environment. All environmental permits, approvals, certifications,
licenses, registrations, orders and decrees applicable to current operations
conducted by the Company and the Company Subsidiaries and all environmental
audits, assessments, investigations and reviews conducted by the Company or any
of the Company Subsidiaries within the last five years or otherwise in the
possession of the Company or any of the Company Subsidiaries on any property
owned, leased or used by the Company or any of the Company Subsidiaries.
2.1.9. No Defaults. Except as disclosed on Schedule 2.1.8 hereto, neither the
Company nor any of the Company Subsidiaries is a party to, or bound by, any
contract or arrangement of any kind to be performed after the date hereof, nor
is the Company or any of the Company Subsidiaries in default in any obligation
or covenant on its part to be performed under any obligation, lease, contract,
order, plan or other arrangement.
2.1.10. Absence of Certain Changes and Events. Except as disclosed on Schedule
2.1.10 hereto, since the Balance Sheet Date, there has not been:
2.1.10.1. Financial Change. Any adverse change in the financial condition,
backlog, operations, assets, liabilities or business of the Company or any of
the Company Subsidiaries;
2.1.10.2. Property Damage. Any damage, destruction, or loss to the business or
properties of the Company or any of the Company Subsidiaries (whether or not
covered by insurance);
2.1.10.3. Dividends. Any declaration, setting aside, or payment of any dividend
or other distribution in respect of the Company Common Stock, the Industrial
Common Stock, the Xxxxx Common Stock, or the Transportation Common Stock or any
direct or indirect redemption, purchase or any other acquisition of any such
stock;
2.1.10.4. Capitalization Change. Any change in the capital stock or in the
number of shares or classes of the authorized or outstanding capital stock of
the Company or any of the Company Subsidiaries as described in Section 2.1.3
hereof;
2.1.10.5. Labor Disputes. Any labor or employment dispute of whatever nature
involving employees of the Company or any of the Company Subsidiaries; or
2.1.10.6. Other Adverse Changes. Any other event or condition known to the
Shareholder particularly pertaining to and adversely affecting the operations,
assets or business of the Company or any of the Company Subsidiaries.
2.1.11. Taxes. All federal, state and local income, value added, sales, use,
franchise, gross revenue, turnover, excise, payroll, property, employment,
customs, duties and any and all other tax returns, reports, and estimates have
been filed with appropriate governmental agencies, domestic and foreign, by the
Company and each of the Company Subsidiaries for each period for which any such
returns, reports, or estimates were due (taking into account any extensions of
time to file before the date hereof); all such returns are true and correct; the
Company and each of the Company Subsidiaries have only done business in Oklahoma
and Texas; all taxes shown by such returns to be payable and any other taxes due
and payable have been paid other than those being contested in good faith by the
Company or the applicable Company Subsidiary; and the tax provision reflected in
the 8/31 Balance Sheet is adequate, in accordance with generally accepted
accounting principles, to cover liabilities of the Company and each of the
Company Subsidiaries at the date thereof for all taxes, including any assessed
interest, assessed penalties and additions to taxes of any character whatsoever
applicable to the Company or any of the Company Subsidiaries or their assets or
business, except that no Federal or State income taxes were accrued on the 8/31
Balance Sheet. No waiver of any statute of limitations executed by the Company
or any of the Company Subsidiaries with respect to any income or other tax is in
effect for any period. The income tax returns of the Company and each of the
Company Subsidiaries have never been examined by the Internal Revenue Service or
the taxing authorities of any other jurisdiction, except as set out in Schedule
2.1.11.. There are no tax liens on any assets of the Company or any of the
Company Subsidiaries except for taxes not yet currently due. Neither the Company
nor any of the Company Subsidiaries is subject to any tax-sharing or allocation
agreement. Neither the Company nor any of the Company Subsidiaries is, or has
ever attempted to become, a Subchapter S-Corporation under the Internal Revenue
Code of 1986, as amended (the Code ). Neither the Company nor any of the
Company Subsidiaries is, or has ever been, a member of a consolidated group
subject to Treasury Regulation 1.1502-6 or any similar provision adopted under
the Code.
2.1.12. Intellectual Property. The Company owns or possesses licenses to use all
Intellectual Property that is either material to the business of the Company or
any of the Company Subsidiaries or that is necessary for the rendering of any
services rendered by the Company or any of the Company Subsidiaries and the use
or sale of any equipment or products used or sold by the Company or any of the
Company Subsidiaries, including all such Intellectual Property listed in
Schedule 2.1.8 hereto (the Required Intellectual Property ). The Required
Intellectual Property is owned or licensed by the Company or one of the Company
Subsidiaries free and clear of any Encumbrance. Neither the Company nor any of
the Company Subsidiaries have granted to any other person any license to use any
Required Intellectual Property. Neither the Company nor any of the Company
Subsidiaries have received any notice of infringement, misappropriation, or
conflict with, the Intellectual Property rights of others in connection with the
use by their use of the Required Intellectual Property or otherwise in
connection with the operation of their businesses.
2.1.13. Title to and Condition of Assets. Except as disclosed on Schedule 2.1.13
hereto, the Company and each of the Company Subsidiaries have good, indefeasible
and marketable title to all of their properties, interests in properties, and
assets, real and personal, reflected in the 8/31 Balance Sheet or in
Schedule 2.1.8 hereto, free and clear of any Encumbrance of any nature
whatsoever, except (i)Encumbrances reflected in the 8/31 Balance Sheet or in
Schedule 2.1.8 hereto, (ii)liens for current taxes not yet due and payable, and
(iii)such imperfections of title, easements and Encumbrances, if any, as are
not substantial in character, amount, or extent and do not and will not
materially detract from the value, or interfere with the present use, of the
property subject thereto or affected thereby, or otherwise materially impair
business operations. All leases pursuant to which the Company or any of the
Company Subsidiaries leases (whether as lessee or lessor) any substantial amount
of real or personal property are in good standing, valid, and effective; and
there is not, under any such leases, any existing default or event of default or
event which with notice or lapse of time, or both, would constitute a default by
the Company or the applicable Company Subsidiary and in respect to which neither
the Company nor the applicable Company Subsidiary has not taken adequate steps
to prevent a default from occurring. The buildings and premises of the Company
and each of the Company Subsidiaries that are used in its business are in good
operating condition and repair, subject only to ordinary wear and tear. All
rigs, rig equipment, machinery, transportation equipment, tools and other major
items of equipment of the Company and each of the Company Subsidiaries are in
good operating condition and in a state of reasonable maintenance and repair,
ordinary wear and tear excepted, and are free from any known defects except as
may be repaired by routine maintenance and such minor defects as to not
substantially interfere with the continued use thereof in the conduct of normal
operations. To the best of the Shareholders knowledge, all such assets conform
to all applicable laws governing their use. No notice of any violation of any
law, statute, ordinance, or regulation relating to any such assets has been
received by the Company, any of the Company Subsidiaries or the Shareholder,
except such as have been fully complied with.
2.1.14. Contracts. All contracts, leases, plans or other arrangements to which
the Company or any of the Company Subsidiaries is a party, by which any of them
are bound or to which any of them or their assets are subject are in full force
and effect, and constitute valid and binding obligations of the Company or the
applicable Company Subsidiary. Neither the Company nor any of the Company
Subsidiaries is, and to the knowledge of the Shareholder, no other party to any
such contract, lease, plan or other arrangement is, in default thereunder, and
no event has occurred which (with or without notice, lapse of time, or the
happening of any other event) would constitute a default thereunder. No contract
has been entered into on terms which could reasonably be expected to have an
adverse effect on the Company or any of the Company Subsidiaries. The
Shareholder has not received any information which would cause the Shareholder
to conclude that any customer of the Company or any of the Company Subsidiaries
will (or is likely to) cease doing business with the Company or the applicable
Company Subsidiary (or their successors) as a result of the consummation of the
transactions contemplated hereby.
2.1.15. Licenses and Permits. The Company and each of the Company Subsidiaries
possess all Permits necessary under law or otherwise for the Company and each of
the Company Subsidiaries to conduct their businesses as now being conducted and
to construct, own, operate, maintain and use their assets in the manner in which
they are now being constructed, operated, maintained and used, including all
such Permits listed in Schedule 2.1.8 hereto (collectively, the Required
Permits ). Each of the Required Permits and the rights of the Company and each
of the Company Subsidiaries with respect thereto are valid and subsisting, in
full force and effect, and enforceable by the Company or the applicable Company
Subsidiary subject to administrative powers of regulatory agencies having
jurisdiction. The Company and each of the Company Subsidiaries is in compliance
in all respects with the terms of each of the Required Permits. None of the
Required Permits have been, or to the knowledge of the Shareholder, is
threatened to be, revoked, canceled, suspended or modified.
2.1.16. Litigation. Except as set forth in Schedule 2.1.16 hereto, there is no
suit, action, or legal, administrative, arbitration, or other proceeding or
governmental investigation pending to which the Company or any of the Company
Subsidiaries is a party or, to the knowledge of the Shareholder, might become a
party or which particularly affects the Company, any of the Company Subsidiaries
or their assets, nor is any change in the zoning or building ordinances directly
affecting the real property or leasehold interests of the Company or any of the
Company Subsidiaries, pending or, to the knowledge of the Shareholder,
threatened.
2.1.17. Environmental Compliance.
2.1.17.1. Environmental Conditions. There are no environmental conditions or
circumstances, including, without limitation, the presence or release of any
Substance of Environmental Concern (defined below), on any property presently or
previously owned, leased or operated by the Company or any of the Company
Subsidiaries, or on any property to which any Substance of Environmental Concern
or waste generated by the operations of the Company or any of the Company
Subsidiaries or the use of their assets were disposed of, which would have an
adverse effect on the business or business prospects of the Company. The term
Substance of Environmental Concern means (a) any gasoline, petroleum (including
crude oil or any fraction thereof), petroleum product, polychlorinated
biphenyls, urea-formaldehyde insulation, asbestos, pollutant, contaminant,
radiation and any other substance of any kind, whether or not any such substance
is defined as toxic or hazardous under any Environmental Law (as defined in
Section 2.1.17.3 hereof), that is regulated pursuant to or could give rise to
liability under any Environmental Law;
2.1.17.2. Permits, etc. The Company and each of the Company Subsidiaries have,
and within the period of all applicable statute of limitations have had, in full
force and effect all environmental Permits required to conduct their operations,
and are, within the period of all applicable statutes of limitations has been,
operating in compliance thereunder;
2.1.17.3. Compliance. The operations of the Company and each of the Company
Subsidiaries and the use of their assets are, and within the period of all
applicable statutes of limitations, have been in compliance with applicable
Environmental Law. Environmental Law as used herein means any and all laws,
rules, orders, regulations, statutes, ordinances, codes, decrees, and other
legally enforceable requirements (including, without limitation, common law) of
the United States, or any State, local, municipal or other governmental
authority or quasi-governmental authority, regulating, relating to, or imposing
liability or standards of conduct concerning protection of the environmental or
of human health, or employee health and safety as from time to time has been or
is now in effect.
2.1.17.4. Environmental Claims. No notice has been received by the Company, any
of the Company Subsidiaries or the Shareholder from any entity, governmental
agency or individual regarding any existing, pending or threatened
investigation, inquiry, enforcement action. litigation, or liability, including,
without limitation any claim for remedial obligations, response costs or
contribution, relating to any Environmental Law;
2.1.17.5. Enforcement. Neither the Company nor any of the Company Subsidiaries
nor, to the knowledge of the Shareholder, any predecessor of the Company or any
of the Company Subsidiaries or other party acting on behalf of the Company or
any of the Company Subsidiaries, has entered into or agreed to any consent,
decree, order, settlement or other agreement, nor is subject to any judgment,
decree, order or other agreement, in any judicial, administrative, arbitral, or
other forum, relating to compliance with or liability under any Environmental
Law;
2.1.17.6. Liabilities. Neither the Company nor any of the Company Subsidiaries
has not assumed or retained, by contract or operation of law, any liabilities of
any kind, fixed or contingent, known or unknown, under any Environmental Law;
2.1.17.7. Renewals. The Shareholder does not know of any reason the Company or
any of the Company Subsidiaries (or their successors) would not be able to renew
without material expense any of the permits, licenses, or other authorizations
required pursuant to any Environmental Law to use any of the assets or conduct
any of the current or planned operations of the Company or any of the Company
Subsidiaries; and
2.1.17.8. Asbestos and PCBs. No material amounts of friable asbestos currently
exist on any property owned or operated by the Company or any of the Company
Subsidiaries, nor do polychlorinated biphenyls exist in concentrations of 50
parts per million or more in electrical equipment owned or being used by the
Company or any of the Company Subsidiaries in their operations or on their
properties.
2.1.18. Compliance with Other Laws. Neither the Company nor any of the Company
Subsidiaries is not in violation of or in default with respect to, or in alleged
violation of or alleged default with respect to, the Occupational Safety and
Health Act (29 U.S.C. ''651 et seq.) as amended, or any other applicable law or
any applicable rule, regulation, or any writ or decree of any court or any
governmental commission, board, bureau, agency, or instrumentality, or
delinquent with respect to any report required to be filed with any governmental
commission, board, bureau, agency or instrumentality.
2.1.19. ERISA Plans or Labor Issues. For purposes of this Section 2.1.19., the
term Company shall collectively refer to the Company, each Company Subsidiary
and each other entity which is treated as a single employer with the Company or
a Company Subsidiary under Section 414 of he Code. Except as identified in
Schedule 2.1.8., the Company does not currently sponsor, maintain or contribute
to, and has not at any time sponsored, maintained or contributed to any Employee
Plan (as defined in Section 2.1.8.8. hereof) or any other employee benefit plan
which is or was subject to any of the provisions of the Employee Retirement
Income Security Act of 1974, as amended (ERISA ), in which any of its employees
are or were participants (whether or not on an active or frozen basis). Each
Employee Plan set forth in Schedule 2.1.8. hereto complies currently, and has
complied in the past, in form and operation, with the applicable provisions of
ERISA, the Code and other applicable laws including, without limitation, the
timely filing of all 5500 series forms. Also, with respect to each employee
Plan, the Company has not engaged in any prohibited transaction or any violation
of its fiduciary duties to such plan. All contributions required to be made to
each Employee Plan under the terms of such Employee Plan, ERISA or other
applicable law have been timely made and there are no delinquent contributions
as of the Closing Date. None of the Employee Plans (i) is a multiemployer plan
(as defined in Section 3(37) of ERISA), (ii) is a defined benefit pension plan
subject to Title IV of ERISA, (iii) is a voluntary employees beneficiary
association within the meaning of Code Section 501(c)(9), (iv) provides for
medical or other insurance benefits to current or future retired employees or
former employees of the Company (other than as required for group health plan
continuation coverage under Code Section 4980B (COBRA ) or applicable state
law), or (v) obligates the Company to pay any benefits solely as a result of any
change in control of the Company. During the six years preceding the Closing
Date, (i) no under-funded pension plan subject to Section 412 of the Code has
been transferred out of the Company and (ii) the Company has not participated in
or contributed to, or had an obligation to contribute to any multiemployer plan
(as defined in ERISA Section 3(37)) and has no withdrawal liability with respect
to any multiemployer plan. There are no claims or lawsuits which have been
asserted, instituted or threatened against any Employee Plan by any fiduciary or
participant of such plan, except routine claims for benefits thereunder. The
Company has no collective bargaining agreements with any labor union or other
representative of employees. The Company has not engaged in any unfair labor
practices. The Company has no pending or threatened dispute with any of its
existing or former employees.
2.1.20. Investigations; Litigation. No investigation or review by any
governmental entity with respect to the Company or any of the Company
Subsidiaries or any of the transactions contemplated by this Agreement is
pending or, to the knowledge of the Shareholder, threatened, nor has any
governmental entity indicated to the Company or any of the Company Subsidiaries
an intention to conduct the same, and there is no action, suit or proceeding
pending or, to the knowledge of the Shareholder, threatened against or affecting
the Company or any of the Company Subsidiaries at law or in equity, or before
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, that either individually or in the
aggregate, does or is likely to result in an adverse change in the financial
condition, properties or business of the Company or any of the Company
Subsidiaries.
2.1.21. Absence of Certain Business Practices. Neither the Company nor any of
the Company Subsidiaries nor any of their officers, employees or agents, nor any
other person acting on their behalf, has, directly or indirectly, within the
past five years, given or agreed to give any gift or similar benefit to any
customer, supplier, government employee or other person who is or may be in a
position to help or hinder the business of the Company or any of the Company
Subsidiaries(or to assist them in connection with any actual or proposed
transaction) which (i) might subject the Company or any of the Company
Subsidiaries to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had an
adverse effect on the assets, business or operations of the Company or any of
the Company Subsidiaries, or (iii) if not continued in the future, might
adversely affect the assets, business operations or prospects of the Company or
any of the Company Subsidiaries or which might subject the Company or any of the
Company Subsidiaries to suit or penalty in a private or governmental litigation
or proceeding.
2.1.22. No Untrue Statements. The Shareholder has made available to Buyer true,
complete and correct copies of all contracts, documents concerning all
litigation and administrative proceedings, licenses, permits, insurance
policies, lists of suppliers and customers, and records relating principally to
the assets and businesses of the Company and each of the Company Subsidiaries,
and such information covers all commitments and liabilities of the Company and
each of the Company Subsidiaries relating to their business or the assets. This
Agreement and the agreements and instruments to be entered into in connection
herewith do not include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements made herein and therein not
misleading in any material respect.
2.1.23. Consents and Approvals. No consent, approval or authorization of, or
filing or registration with, any governmental or regulatory authority, or any
other person or entity is required to be made or obtained by the Shareholder in
connection with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
2.1.24. Finders Fee. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by the Shareholder and his
counsel directly with Buyer and its counsel, without the intervention of any
other person in such manner as to give rise to any valid claim against any of
the parties hereto for a brokerage commission, finders fee or any similar
payments.
2.2. Representations and Warranties of Buyer. Buyer represents and warrants to
the Shareholder as follows
2.2.1. Organization and Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
has full requisite corporate power and authority to carry on its business as it
is currently conducted, and to own and operate the properties currently owned
and operated by it, and is duly qualified or licensed to do business and is in
good standing as a foreign corporation authorized to do business in all
jurisdictions in which the character of the properties owned or the nature of
the business conducted by it would make such qualification or licensing
necessary.
2.2.2. Agreement Authorized and its Effect on Other Obligations. The
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Buyer, and this
Agreement is a valid and binding obligation of Buyer enforceable (subject to
normal equitable principles) in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, debtor
relief or similar laws affecting the rights of creditors generally. The
execution, delivery and performance of this Agreement by Buyer will not conflict
with or result in a violation or breach of any term or provision of, or
constitute a default under (a) the Certificate of Incorporation or Bylaws of
Buyer or (b) any obligation, indenture, mortgage, deed of trust, lease, contract
or other agreement to which Buyer or any of its property is bound.
2.2.3. Consents and Approvals. No consent, approval or authorization of, or
filing of a registration with, any governmental or regulatory authority, or any
other person or entity is required to be made or obtained by Buyer in connection
with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
2.2.4. Finders Fee. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Buyer and its counsel
directly with the Company and the Shareholder and his counsel, without the
intervention by any other person as the result of any act of Buyer in such a
manner as to give rise to any valid claim against any of the parties hereto for
any brokerage commission, finders fee or any similar payments.
ARTICLE 3
Additional Agreements
3.1. Noncompetition. Except as otherwise consented to or approved in writing by
Buyer, the Shareholder agrees that for a period of 42 months from the date
hereof, he will not, directly or indirectly, acting alone or as a member of a
partnership or as an officer, director, employee, consultant, representative,
holder of, or investor in as much as 5% of any security of any class of any
corporation or other business entity (i) engage in competition with the business
or businesses conducted by the Company, any of the Company Subsidiaries, on the
date hereof, or in any service business the services of which are provided and
marketed by the Company, any of the Company Subsidiaries, on the date hereof in
any state of the United States, or any foreign country in which the Company, any
of the Company Subsidiaries, transacts business on the date hereof; (ii) request
any present customers or suppliers of the Company, any of the Company
Subsidiaries, to curtail or cancel their business with the Company, any of the
Company Subsidiaries, (iii) disclose to any person, firm or corporation any
trade, technical or technological secrets of the Company, any of the Company
Subsidiaries, Buyer or any affiliate of Buyer or any details of their
organization or business affairs or (iv) induce or actively attempt to influence
any employee of the Company, any of the Company Subsidiaries, Buyer or any
affiliate of Buyer to terminate his employment with such entity. The Shareholder
agrees that if either the length of time or geographical area set forth in this
Section 3.1 is deemed too restrictive in any court proceeding, the court may
reduce such restrictions to those which it deems reasonable under the
circumstances. The obligations expressed in this Section 3.1 are in addition to
any other obligations that the Shareholder may have under the laws of any
jurisdiction in which they do business requiring an employee of a business or a
shareholder who sells his stock in a corporation (including a disposition in a
merger) to limit his activities so that the goodwill and business relations of
his employer and of the corporation whose stock he has sold (and any successor
corporation) will not be materially impaired. The Shareholder further agrees and
acknowledges that the Company, each of the Company Subsidiaries and Buyer do not
have any adequate remedy at law for the breach or threatened breach by the
Shareholder of this covenant, and agree that the Company, each of the Company
Subsidiaries or Buyer may, in addition to the other remedies which may be
available to it hereunder, file a suit in equity to enjoin the Shareholder from
such breach or threatened breach. If any provisions of this Section 3.1 are held
to be invalid or against public policy, the remaining provisions shall not be
affected thereby. The Shareholder acknowledges that the covenants set forth in
this Section 3.1 are being executed and delivered by such Shareholder in
consideration of the covenants of Buyer contained in this Agreement, and for
other good and valuable consideration, receipt of which is hereby acknowledged.
3.2. Facility Lease. From the date hereof, the Shareholder hereby agrees to
lease to the Company its current facilities in Woodward, Oklahoma pursuant to
the terms and provisions of those certain Lease Agreements of even date herewith
by and between the Company and the Shareholder executed and delivered in
connection herewith.
3.3. Further Assurances. From time to time, as and when requested by any party
hereto, any other party hereto shall execute and deliver, or cause to be
executed and delivered, such documents and instruments and shall take, or cause
to be taken, such further or other actions as may be reasonably necessary to
effectuate the transactions contemplated hereby.
ARTICLE 4
Indemnification
4.1. Indemnification by the Shareholder. In addition to any other remedies
available to Buyer under this Agreement, or at law or in equity, the Shareholder
shall indemnify, defend and hold harmless the Company, Buyer and their
affiliates and their respective officers, directors, employees, agents and
stockholders (collectively, the Buyer Indemnified Parties ), against and with
respect to any and all claims, costs, damages, losses, expenses, obligations,
liabilities, recoveries, suits, causes of action and deficiencies, including
interest, penalties and reasonable fees and expenses of attorneys, consultants
and experts (collectively, the Damages ) that the Buyer Indemnified Parties
shall incur or suffer, which arise, result from or relate to (i) any breach by
the Shareholder of (or the failure of the Shareholder to perform) his
representations, warranties, covenants or agreements in this Agreement or in any
schedule, certificate, exhibit or other instrument furnished or delivered to
Buyer by the Shareholder under this Agreement or (ii) [scheduled liabilities].
4.2. Indemnification by Buyer. In addition to any other remedies available to
the Shareholder under this Agreement, or at law or in equity, Buyer shall
indemnify, defend and hold harmless the Shareholder against and with respect to
any and all Damages that such indemnitees shall incur or suffer, which arise,
result from or relate to any breach of, or failure by Buyer to perform, any of
its representations, warranties, covenants or agreements in this Agreement or in
any schedule, certificate, exhibit or other instrument furnished or delivered to
the Shareholder by or on behalf of Buyer under this Agreement.
4.3. Indemnification Procedure. In the event that any party hereto discovers or
otherwise becomes aware of an indemnification claim arising under Section 4.1 of
this Agreement, such indemnified party shall give written notice to the
indemnifying party, specifying such claim, and may thereafter exercise any
remedies available to such party under this Agreement; provided, however, that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of any obligations hereunder, to the extent the
indemnifying party is not materially prejudiced thereby. Further, promptly after
receipt by an indemnified party hereunder of written notice of the commencement
of any action or proceeding with respect to which a claim for indemnification
may be made pursuant to Section 4.1 hereof, such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party, give
written notice to the latter of the commencement of such action; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of any obligations hereunder, to
the extent the indemnifying party is not materially prejudiced thereby. In case
any such action is brought against an indemnified party, the indemnifying party
shall be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified, to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
such notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof unless the
indemnifying party has failed to assume the defense of such claim and to employ
counsel reasonably satisfactory to such indemnified person. An indemnifying
party who elects not to assume the defense of a claim shall not be liable for
the fees and expenses of more than one counsel in any single jurisdiction for
all parties indemnified by such indemnifying party with respect to such claim or
with respect to claims separate but similar or related in the same jurisdiction
arising out of the same general allegations. Notwithstanding any of the
foregoing to the contrary, the indemnified party will be entitled to select its
own counsel and assume the defense of any action brought against it if the
indemnifying party fails to select counsel reasonably satisfactory to the
indemnified party, the expenses of such defense to be paid by the indemnifying
party. No indemnifying party shall consent to entry of any judgment or enter
into any settlement with respect to a claim without the consent of the
indemnified party, which consent shall not be unreasonably withheld, or unless
such judgment or settlement includes as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability with respect to such claim. No indemnified party shall consent to
entry of any judgment or enter into any settlement of any such action, the
defense of which has been assumed by an indemnifying party, without the consent
of such indemnifying party, which consent shall not be unreasonably withheld or
delayed.
ARTICLE 5
Miscellaneous
5.1. Survival of Representations, Warranties and Covenants. All representations,
warranties, covenants and agreements made by the parties hereto shall survive
indefinitely without limitation, notwithstanding any investigation made by or on
behalf of any of the parties hereto. All statements contained in any
certificate, schedule, exhibit or other instrument delivered pursuant to this
Agreement shall be deemed to have been representations and warranties by the
respective party or parties, as the case may be, and shall also survive
indefinitely despite any investigation made by any party hereto or on its
behalf.
5.2. Entirety. This Agreement embodies the entire agreement among the parties
with respect to the subject matter hereof, and all prior agreements between the
parties with respect thereto are hereby superseded in their entirety.
5.3. Counterparts. Any number of counterparts of this Agreement may be executed
and each such counterpart shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one instrument.
5.4. Notices and Waivers. Any notice or waiver to be given to any party hereto
shall be in writing and shall be delivered by courier, sent by facsimile
transmission or first class registered or certified mail, postage prepaid,
return receipt requested:
If to Buyer
Addressed to: With a copy to:
WellTech Eastern, Inc. Xxxxxx & Xxxxxx, L.L.P.
Two Tower Center, Tenth Floor 700 Louisiana, 00xx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000 Xxxxxxx, Xxxxx 00000-0000
Attn: General Counsel Attn: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
If to Shareholder
Addressed to: With a copy to:
Xxxxxx X. Xxxxx Xxxxxx X. Xxxxxx, Esq.
XX 00 Xxx 000X, Xxxxx 000 P. O. Box 887
Graford, Texas 76449 Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Any communication so addressed and mailed by first-class registered or certified
mail, postage prepaid, with return receipt requested, shall be deemed to be
received on the third business day after so mailed, and if delivered by courier
or facsimile to such address, upon delivery during normal business hours on any
business day.
5.5. Table of Contents and Captions. The table of contents and captions
contained in this Agreement are solely for convenient reference and shall not be
deemed to affect the meaning or interpretation of any article, section, or
paragraph hereof.
5.6. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the successors and assigns of the
parties hereto.
5.7. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
5.8. Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the applicable laws of the State of Oklahoma.
IN WITNESS WHEREOF, the Shareholder has executed this Agreement and Buyer has
caused this Agreement to be signed in its corporate names by its duly authorized
representative, all as of the day and year first above written.
WELLTECH EASTERN, INC.
By:
Name:
Title:
SHAREHOLDER
Xxxxxx X. Xxxxx
