1
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
AMONG
XXXXXXXXX DRILLING COMPANY
AND
H. XXXX XXXXXX
XXXXX X. XXXXXX
XXXXX X. XXXXXX
AND
XXXXXXX X. XXXXXX
2
TABLE OF CONTENTS
Page
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ARTICLE I
THE STOCK PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 The Stock Purchase . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Purchase Price . . . . . . . . . . . . . . . . . . . 1
SECTION 1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PDC . . . . . . . . . . . . . . . . . . . 2
SECTION 2.1 Organization, Standing and Power . . . . . . . . . . 2
SECTION 2.2 Authority; Non-Contravention . . . . . . . . . . . . 2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SLEDGES . . . . . . . . . . . . . . . 2
SECTION 3.1 Organization, Standing and Power . . . . . . . . . . 3
SECTION 3.2 Capital Structure . . . . . . . . . . . . . . . . . . 3
SECTION 3.3 Ownership of Company Stock . . . . . . . . . . . . . 3
SECTION 3.4 Authority; Non-Contravention . . . . . . . . . . . . 3
SECTION 3.5 Financial Statements . . . . . . . . . . . . . . . . 4
SECTION 3.6 Absence of Material Adverse Change . . . . . . . . . 4
SECTION 3.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3.8 Real and Personal Property; Title Thereto . . . . . . 5
SECTION 3.9 Accounts Receivable . . . . . . . . . . . . . . . . . 6
SECTION 3.10 Liabilities . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.11 Insurance . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.12 Contracts and Other Agreements . . . . . . . . . . . 6
SECTION 3.13 Records . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.14 Transactions with Affiliates . . . . . . . . . . . . 7
SECTION 3.15 Employee Benefit Plans; Employment Agreements . . . . 7
SECTION 3.16 Labor Matters . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.17 Environmental Matters . . . . . . . . . . . . . . . . 8
SECTION 3.18 Litigation . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.19 Governmental Licenses and Permits; Compliance with
Law . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.20 Brokers . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.21 Bank Accounts . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.22 Distributions to Stockholders . . . . . . . . . . . . 10
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SECTION 3.23 Workers' Compensation Claims. . . . . . . . . . . . . 10
ARTICLE IV
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.1 Fees and Expenses . . . . . . . . . . . . . . . . . . 11
SECTION 4.2 Reasonable Efforts . . . . . . . . . . . . . . . . . 11
SECTION 4.3 Public Announcements . . . . . . . . . . . . . . . . 11
SECTION 4.4 Employee Benefits . . . . . . . . . . . . . . . . . . 11
SECTION 4.5 Sledges Indemnification . . . . . . . . . . . . . . . 12
SECTION 4.6 Repayment of Bank Debt . . . . . . . . . . . . . . . 13
SECTION 4.7 Repayment of Sledges Indebtedness to the Company . . 13
SECTION 4.8 Certain Tax Matters . . . . . . . . . . . . . . . . . 13
SECTION 4.9 Xxxxx Drive Office Lease. . . . . . . . . . . . . . . 14
SECTION 4.10 IBM Leases. . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V
CONDITIONS PRECEDENT TO THE STOCK PURCHASE . . . . . . . . . . . . . . . . 15
SECTION 5.1 Conditions to Each Party's Obligation to Effect the
Stock Purchase . . . . . . . . . . . . . . . . . . . 15
SECTION 5.2 Conditions to Obligation of the Sledges to Effect
the Stock Purchase . . . . . . . . . . . . . . . . . 15
SECTION 5.3 Conditions to Obligations of PDC to Effect the
Stock Purchase . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI
POST CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.1 Sale of Assets to Xxxxxx Ranches, Ltd. . . . . . . . 18
[SECTION 6.2 Access to Information. . . . . . . . . . . . . . . . . 18
SECTION 6.3 Use of Name. . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.1 Notices . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.2 Interpretation . . . . . . . . . . . . . . . . . . . 20
SECTION 7.3 Counterparts . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.4 Entire Agreement; No Third-Party Beneficiaries . . . 20
SECTION 7.5 Governing Law . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.6 Assignment . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.7 Severability . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.8 Enforcement of This Agreement . . . . . . . . . . . . 21
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Exhibit A(I) CONSULTING AGREEMENT OF XXXXX X. XXXXXX
Exhibit A(II) CONSULTING AGREEMENT OF XXXXXXX X. XXXXXX
Exhibit B(I) NON-COMPETITION AGREEMENT OF XXXXX X. XXXXXX
Exhibit B(II) NON-COMPETITION AGREEMENT OF XXXXXXX X. XXXXXX
Exhibit B(III) NON-COMPETITION AGREEMENT OF H. XXXX XXXXXX
Exhibit C ASSET PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of October 23, 1996 (this
"Agreement"), among Xxxxxxxxx Drilling Company ("PDC"), a Delaware corporation
and a wholly-owned subsidiary of Xxxxxxxxx Energy, Inc., H. Xxxx Xxxxxx ("G
Xxxxxx"), Xxxxx X. Xxxxxx ("J Xxxxxx"), Xxxxx X. Xxxxxx ("X Xxxxxx") and
Xxxxxxx X. Xxxxxx ("M Xxxxxx"), each of whom is an individual residing in
Midland, Texas (G Xxxxxx, J Xxxxxx, X Xxxxxx and M Xxxxxx are collectively
referred to herein as the "Sledges").
WITNESSETH:
WHEREAS, the Sledges or the minor children of X Xxxxxx and M Xxxxxx
beneficially own all of the outstanding Common Stock, par value $0.10 per share
("Company Stock"), of Xxxxxx Cattle Company, Inc., d/b/a Xxxx Xxxxxx Drilling
Corporation (the "Company");
WHEREAS, PDC desires to purchase, and the Sledges desire to sell, or
cause the sale of, all of the outstanding Company Stock (the "Stock Purchase")
for the consideration set forth and provided for herein; and
WHEREAS, PDC, on the one hand, and the Sledges, on the other, desire to
make certain representations, warranties and agreements in connection with the
Stock Purchase.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE STOCK PURCHASE
SECTION 1.1 The Stock Purchase. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as defined in Section 1.3 below)
provided herein, PDC shall purchase from the stockholders of the Company, and
the Sledges shall sell, or cause to be sold, to PDC, all of the outstanding
shares of Company Stock.
SECTION 1.2 Purchase Price. PDC agrees to pay to the stockholders of
the Company at the Closing a total of $11,728,000 (the "Purchase Price") for
all of the outstanding shares of Company Stock ($92.34645669 per share of
Company Stock). The Purchase Price shall be paid in a lump sum by a single
wire transfer to the order of H. Xxxx Xxxxxx, as trustee for all stockholders
of the Company as a group.
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SECTION 1.3 Closing. The closing of the Stock Purchase (the
"Closing") shall take place at 9:00 a.m., local time, on the date of this
Agreement at the offices in Dallas, Texas of counsel to the Sledges and the
Company, Meadows, Owens, Collier, Reed, Cousins & Blau, L.L.P., or at such
other time and place as PDC and the Sledges shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PDC
PDC represents and warrants to the Sledges as follows:
SECTION 2.1 Organization, Standing and Power. PDC is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to carry
on its business as now being conducted.
SECTION 2.2 Authority; Non-Contravention. PDC has all requisite power
and authority to enter into this Agreement and to consummate the Stock
Purchase. The execution and delivery by PDC of this Agreement and the
consummation by PDC of the Stock Purchase have been duly authorized by all
necessary corporate action on the part of PDC. This Agreement has been duly
executed and delivered by PDC and (assuming the valid authorization, execution
and delivery of this Agreement by the Sledges) constitutes a valid and binding
obligation of PDC enforceable against PDC in accordance with its terms, except
to the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of
general applicability relating to or affecting the enforcement of creditors'
rights and by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law). No filing
or registration with, or authorization, consent or approval of, any domestic
(federal and state), foreign or supranational court, commission, governmental
body, regulatory agency, authority or tribunal (a "Governmental Agency") is
required by or with respect to PDC in connection with the execution and
delivery of this Agreement by PDC or is necessary for the consummation by PDC
of the Stock Purchase and the other transactions contemplated by this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SLEDGES
The Sledges jointly and severally represent and warrant to PDC as
follows:
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SECTION 3.1 Organization, Standing and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Texas and has the requisite corporate power and authority
to carry on its business as now being conducted. The Company has no
subsidiaries. The Company is duly qualified to do business, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary.
SECTION 3.2 Capital Structure. The authorized capital stock of the
Company consists of 1,000,000 shares of Company Stock, of which 127,000 shares
are issued and outstanding. All outstanding shares of Company Stock are
validly issued, fully paid and nonassessable and have not been issued in
violation of any preemptive rights. There are no options, warrants, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company is a party or by which it is bound obligating the Company to issue,
additional shares of capital stock of the Company.
SECTION 3.3 Ownership of Company Stock. Section 3.3 of the disclosure
schedule of the Sledges dated as of the date of this Agreement, previously
delivered to PDC (the "Sledges Disclosure Schedule") sets forth a true and
correct list of the ownership of Company Stock by the stockholders of the
Company. Each of the stockholders of the Company beneficially holds such
Company Stock free and clear of any restrictions on transfer (other than
restrictions under the Securities Act of 1933 and state securities laws),
taxes, Liens (as defined below in this Section), options, warrants, purchase
rights, contracts, commitments, equities, claims and demands. None of the
stockholders of the Company is a party to (i) any option, warrant, purchase
right, or other contract or commitment that could require him/her to sell,
transfer, or otherwise dispose of any Company Stock (other than pursuant to
this Agreement) or (ii) any voting trust, proxy, or other agreement or
understanding with respect to the Company Stock. For purposes of this
Agreement "Liens" means liens, mortgages, pledges, security interests,
encumbrances, claims or charges of any kind.
SECTION 3.4 Authority; Non-Contravention. Each of the Sledges has all
requisite power and authority to enter into this Agreement and to consummate
the Stock Purchase. This Agreement has been duly executed and delivered by the
Sledges and (assuming the valid authorization, execution and delivery of this
Agreement by PDC) constitutes a valid and binding obligation of each of the
Sledges enforceable against him/her in accordance with its terms, except to the
extent enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by the effect
of general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law). The execution and delivery of
this Agreement do not, and the consummation of the Stock Purchase and
compliance with the provisions hereof will not, conflict with, or result in any
violation of, or default (with or without notice of lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to the loss of a material benefit under, or result in the
creation of any lien, security interest, charges or encumbrances upon any
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of the properties or assets of the Company under, any provision of (i) the
Articles of Incorporation or By-laws of the Company (true and complete copies
of which as of the date hereof have been delivered to PDC), (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the Company
or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any of its respective properties or
assets, other than, in the case of clauses (ii) or (iii), any such conflicts,
violations, defaults, rights, liens, losses, security interests, charges or
encumbrances that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company, materially impair the ability of the Company to
perform its obligations hereunder or prevent the consummation of the Stock
Purchase. Except as set forth on Section 3.4 of the Sledges Disclosure
Schedule, no filing or registration with, or authorization, consent or approval
of, any Governmental Entity is required by or with respect to any of the
Sledges or the Company in connection with the execution and delivery of this
Agreement by the Sledges or is necessary for the consummation by the Sledges of
the Stock Purchase or any other transaction contemplated by this Agreement.
For purposes of this Agreement, "Material Adverse Change" or "Material Adverse
Effect" means any change or effect that is or, as far as can reasonably be
determined, is likely to be materially adverse to the assets, properties,
condition (financial or otherwise), business or results of operations of the
Company.
SECTION 3.5 Financial Statements. Included in Section 3.5 of the
Sledges Disclosure Schedule are the following unaudited financial statements
(collectively, the "Company Financial Statements") of the Company: (i) balance
sheets as of December 31, 1995 and August 31, 1996; and (ii) statements of
income and statements of cash flows for (x) each of the four years in the
period ended December 31, 1995, and (y) the eight-month period ended August 31,
1996.
Except as may be set forth in Section 3.5 of the Sledges Disclosure
Schedule, the Company Financial Statements (a) are complete and correct in all
material respects, (b) have been prepared in conformity with accrual tax basis
accounting consistently applied, and (c) present fairly the financial condition
of the Company at the dates presented and the results of operations of the
Company for the periods covered. There does not, and there will not be at
Closing, exist any fact, event, condition or claim known to any of the Sledges
which would cause a Material Adverse Change in the Company Financial Statements
as presented other than as set forth therein.
SECTION 3.6 Absence of Material Adverse Change. Except as otherwise
set forth in Section 3.6 of the Sledges Disclosure Schedule, there has not been
any Material Adverse Change with respect to the Company since August 31, 1996.
SECTION 3.7 Taxes. Except as otherwise set forth in Section 3.7 of
the Sledges Disclosure Schedule: (i) all Tax Returns required to be filed by
the Company have been filed or extensions have been validly obtained; (ii) Tax
Returns referred to in clause (i) are true and
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correct in all material respects and have been completed in all material
respects in accordance with applicable law; (iii) all Taxes shown to be due on
the Tax Returns referred to in clause (i) have been timely paid or extensions
have been duly obtained or such taxes have been adequately provided for on the
Company's balance sheet or are being timely and properly contested; (iv) the
Company has not waived any statute of limitations in respect of Taxes of the
Company; (v) the Tax Returns referred to in clause (i) have been examined by
the Internal Revenue Service or the appropriate state taxing authority or the
period for assessment of the Taxes in respect of such Tax Returns were required
to be filed has expired; (vi) no issues that have been raised in writing by the
relevant taxing authority in connection with the examination of the Tax Returns
referred to in clause (i) are currently pending; (vii) all deficiencies
asserted or assessments made as a result of any examination of the Tax Returns
referred to in clause (i) by a taxing authority have been paid in full or
adequately provided for on the Company's balance sheet or are being timely and
properly contested; (viii) the Company has made available to PDC correct and
complete copies of all federal and state income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by the
Company; (ix) from March 1, 1987, to the present, the Company has duly elected
to be treated as an S corporation pursuant to Section 1362(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and the corresponding provisions
of the laws of the State of Texas, and no taxing authority has challenged the
effectiveness of such election; (x) approval of the Company's election to be
treated as an S corporation has been received from the Internal Revenue Service
and such approval has been recognized by the State of Texas; (xi) no event has
or will occur before the Closing Date to have caused the Company's election to
be treated as an S corporation to be terminated in any manner; and (xii) the
Company shall not be subject to a tax on built-in gains under Section 1374 of
the Code as a result of the Stock Purchase. For purposes of this Agreement,
(a) "Tax" (and, with correlative meaning, "Taxes" and "Taxable") means any
federal, state, local or foreign income, gross receipts, property, sales, use,
license, excise, franchise, employment, payroll, withholding, alternative or
added minimum, ad valorem, transfer, severance or excise tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, imposed by any governmental
authority, and (b) "Tax Return" means any return, report or similar statement
required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
SECTION 3.8 Real and Personal Property; Title Thereto. Set forth in
Section 3.8 of the Sledges Disclosure Schedule is a complete and accurate
schedule of all real and personal property owned by the Company having an
individual fair market value in excess of $25,000, and other than the real and
personal property to be resold to Xxxxxx Ranches, Ltd., a Texas limited
partnership, immediately following the Closing Date as provided in Section 6.1
of this Agreement. Except as set forth in Section 3.8 of the Sledges
Disclosure Schedule, the Company has good and, with respect to real property,
indefeasible title to all of such real property and personal property, subject
to no Liens except for (i) Liens for taxes not yet delinquent or the validity
of which is being contested in good faith, and (ii) any Liens arising by
operation of law
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securing obligations not yet overdue. Notwithstanding the foregoing, title to
the oil and gas interests of the Company is of the type customarily acceptable
to prudent investors in oil and gas interests in the area where such oil and
gas interests of the Company are located. Any real or personal property held
by the Company under lease are held under valid and enforceable leases which
will continue in full force and effect immediately after the Closing Date; the
Company is not in default with respect to any such lease.
SECTION 3.9 Accounts Receivable. Set forth in Section 3.9 of the
Sledges Disclosure Schedule is a complete and accurate schedule of the accounts
receivable of the Company as of August 31, 1996, as reflected in the balance
sheet as of that date included in the Company Financial Statements, together
with an accurate aging of those accounts. To the best knowledge of the
Sledges, the accounts described in Section 3.9 have been collected in full, or
are collectible at their full amounts.
SECTION 3.10 Liabilities. There are no liabilities of the Company of
any kind, whether contingent or fixed, other than (i) liabilities disclosed or
provided for in the balance sheet of the Company as of August 31, 1996 included
in the Company Financial Statements or disclosed in Section 3.10 of the Sledges
Disclosure Schedule, or (ii) liabilities incurred in the ordinary course of
business since August 31, 1996, none of which, either individually or in the
aggregate, may be reasonably expected to be materially adverse to the business,
assets, condition (financial or otherwise) or results of operations of the
Company.
SECTION 3.11 Insurance. Set forth in Section 3.11 of the Sledges
Disclosure Schedule is an accurate and complete list and brief description of
all policies of fire and extended coverage, liability, worker compensation and
other forms of similar insurance or indemnity bonds held by the Company. The
Company is not in default in any material respect with respect to any
provisions of any such policy or indemnity bond and has not failed to give any
notice or present any claim thereunder in due and timely fashion, which failure
would materially adversely affect the condition (financial or otherwise),
results of operations, assets, liabilities or business of the Company.
SECTION 3.12 Contracts and Other Agreements. Except as disclosed on
Section 3.12 of the Sledges Disclosure Schedule, the Company is not a party to
or bound by any written or oral (i) employment, agency, consulting or similar
contract which cannot be terminated upon 30 days' notice without liability to
the Company, (ii) lease, whether as lessor or lessee, with respect to any real
or personal property, (iii) contract or commitment involving more than $10,000
a year, other than contracts with the Company's contract drilling customers in
the ordinary course of business; (iv) credit agreements; (v) guarantee,
suretyship, indemnification or contribution agreement, or (vi) other contracts
not made in the ordinary course of business.
SECTION 3.13 Records. The stock record books and minute books of the
Company are complete and correct in all material respects, and record all
transactions required
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to be set forth concerning all proceedings, consents, actions and meetings of
the stockholders and the Board of Directors of the Company.
SECTION 3.14 Transactions with Affiliates. Except as otherwise set
forth in 3.14 of the Sledges Disclosure Schedule, no Affiliate (as hereinafter
defined) has any direct or indirect interest in or owns directly or indirectly
any asset or right owned by or used in the conduct of the contract drilling
business of the Company or is party to any contract, lease, agreement,
arrangement or commitment used in such business.
"Affiliate" as used in this Section 3.14 means a person which directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under, control with the Company. For purposes of this definition, the
officers, directors and stockholders of the Company shall be deemed Affiliates.
SECTION 3.15 Employee Benefit Plans; Employment Agreements. With
respect to all the employee benefit plans, programs and arrangements of the
Company, including, but not limited to, the Xxxxxx Cattle Company, Inc. Profit
Sharing Plan (the "Company Profit Sharing Plan") and related trust maintained
for the benefit of any current or former employee, officer or director of the
Company (collectively, the "Company Plans"), except as would not, individually
or in the aggregate, have a Material Adverse Effect on the Company: (i) none of
the Company Plans is a multi-employer plan within the meaning of ERISA; (ii)
none of the Company Plans promises or provides retiree medical or life
insurance benefits to any person, except as otherwise required by law; (iii)
each Company Plan intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service
that it is so qualified and nothing has occurred since the date of such letter
that could reasonably be expected to affect the qualified status of such
Company Plan; (iv) each Company Plan has been operated in all respects in
accordance with its terms and the requirements of applicable law; and (v) the
Company has not incurred any direct or indirect liability under, arising out of
or by operation of Title IV of ERISA in connection with the termination of, or
withdrawal from, any Company Plan or other retirement plan or arrangement, and
no fact or event exists that could reasonably be expected to give rise to any
such liability. The aggregate accumulated benefit obligations of any Company
Plan subject to Title IV of ERISA do not exceed the fair market value of the
assets of such Company Plan. Except as set forth in Section 3.15 of the Xxxxxx
Stockholder Disclosure Schedule, the Company has no Company Plans or any
employment or severance agreements with any of its employees.
SECTION 3.16 Labor Matters. (i) The Company is not a party to any
collective bargaining agreement or other material contract or agreement with
any labor organization or other representative of employees nor is any such
contract being negotiated; (ii) there is no material unfair labor practice
charge or complaint pending nor, to the knowledge of any of the Sledges,
threatened, with regard to employees of the Company; (iii) there is no labor
strike, material slowdown, material work stoppage or other material labor
controversy in effect, or, to the knowledge of any of the Sledges, threatened
against the Company; (iv) as of the date hereof,
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no representation question exists, nor to the knowledge of any of the Sledges
are there any campaigns being conducted to solicit cards from the employees of
the Company to authorize representation by a labor organization; (v) the
Company is not party to, or is not otherwise bound by, any consent decree with
any governmental authority relating to employees or employment practices of the
Company; (vi) the Company has not incurred any liability under, and has
complied in all respects with, the Worker Adjustment Retraining Notification
Act, and no fact or event exists that could give rise to liability under such
Act; and (vii) except as disclosed in Section 3.16 of the Sledges Disclosure
Schedule, the Company is in compliance with all applicable agreements,
contracts and policies relating to employment, employment practices, wages,
hours and terms and conditions of employment of the employees, except where the
failure to be in compliance with each such agreement, contract and policy would
not, either singly or in the aggregate, have a Material Adverse Effect on the
Company.
SECTION 3.17 Environmental Matters.
(a) Except to the extent that the inaccuracy of any of the
following, individually or in the aggregate, would not have a Material Adverse
Effect on the Company, to the actual knowledge of the Sledges:
(i) the Company holds, and is in compliance with and has been
in compliance with for the last three years, all Environmental Permits,
and is otherwise in substantial compliance and has been in substantial
compliance for the last three years with, all applicable Environmental
Laws and there is no condition that is reasonably likely to prevent or
materially interfere prior to the Effective Time with compliance by the
Company with Environmental Laws;
(ii) no modification, revocation, reissuance, alteration,
transfer or amendment of any Environmental Permit, or any review by, or
approval of, any third party of any Environmental Permit is required in
connection with the execution or delivery of this Agreement or the
consummation by the Company of the transactions contemplated hereby or
the operation of the business of the Company on the date of the Closing;
(iii) the Company has not received any Environmental Claim, nor
has any Environmental Claim been threatened against the Company;
(iv) the Company has not entered into, agreed to or is not
subject to any outstanding judgment, decree, order or consent
arrangement with any governmental authority under any Environmental
Laws, including without limitation those relating to compliance with any
Environmental Laws or to the investigation, cleanup, remediation or
removal of Hazardous Materials;
(v) there are no circumstances that are reasonably likely to
give rise to liability under any agreements with any person pursuant to
which the Company would be required
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to defend, indemnify, hold harmless, or otherwise be responsible for any
violation by or other liability or expense of such person, or alleged
violation by or other liability or expense of such person, arising out
of any Environmental Law; and
(vi) there are no other circumstances or conditions that are
reasonably likely to give rise to liability of the Company under any
Environmental Laws.
(b) For purposes of this Agreement, the terms below shall have
the following meanings:
"Environmental Claim" means any written complaint, notice, claim,
demand, action, suit or judicial, administrative or arbitral proceeding
by any person to the Company asserting liability or potential liability
(including without limitation, liability or potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resource damages, property damage, personal injury, fines or penalties)
arising out of, relating to, based on or resulting from (i) the
presence, discharge, emission, release or threatened release of any
Hazardous Materials at any location, (ii) circumstances forming the
basis of any violation or alleged violation of any Environmental Laws or
Environmental Permits, or (iii) otherwise relating to obligations or
liabilities of the Company under any Environmental Law.
"Environmental Permits" means all permits, licenses,
registrations, exemptions and other governmental authorizations required
under Environmental Laws for the Company to conduct its operations as
presently conducted.
"Environmental Laws" means all applicable foreign, federal, state
and local statutes, rules, regulations, ordinances, orders, decrees and
common law relating in any manner to pollution or protection of the
environment, to the extent and in the form that such exist at the date
hereof.
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any
fraction thereof) and petroleum products, asbestos and asbestos-
containing materials, pollutants, contaminants and all other materials
and substances, including but not limited to radioactive materials,
regulated pursuant to any Environmental Laws.
SECTION 3.18 Litigation. Except as set forth in Section 3.18 of the
Sledges Disclosure Schedule, there is no suit, action, investigation or
proceeding pending or, to the knowledge of the Sledges, threatened against the
Company at law or in equity before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind, that would have a
Material Adverse Effect on the Company or, with respect to such matters that
are pending or threatened as of the date hereof, materially impair the ability
of the Company to perform its
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obligations hereunder or to consummate the Stock Purchase, and there is no
judgment, decree, injunction, rule or order of any court, governmental
department, commission, board, bureau, agency, instrumentality or arbitrator to
which the Company is subject that would have a Material Adverse Effect on the
Company or, with respect to such items that are outstanding and applicable as
of the date hereof, materially impair the ability of the Company to perform its
obligations hereunder or to consummate the Stock Purchase.
SECTION 3.19 Governmental Licenses and Permits; Compliance with Law.
The Company has not received notice of any revocation or modification of any
federal, state, local or foreign governmental license, certification, tariff,
permit, authorization or approval, the revocation or modification of which
would have a Material Adverse Effect on the Company. The conduct of the
business of the Company complies with all statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees or arbitration awards applicable
thereto, except for violations or failures to comply, if any, that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
SECTION 3.20 Brokers. No broker, investment banker or other person is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
SECTION 3.21 Bank Accounts. A complete list of each bank account
maintained by the Company, including safe deposit boxes maintained by the
Company, the account balances and the names of the persons authorized to draw
down upon or have access thereto is set forth in Section 3.21 of the Sledges
Disclosure Schedule.
SECTION 3.22 Distributions to Stockholders of the Company. Except as
permitted by Section 4.1, the Company, since August 31, 1996, has not declared,
set aside or paid any dividends on, or made any other actual, constructive or
deemed distributions in respect of, any of its capital stock, or otherwise made
any payments to any of the stockholders of the Company other than salaries in
the ordinary course of business.
SECTION 3.23 Workers' Compensation Claims. There are no workers'
compensation claims pending or, to the knowledge of the Sledges, threatened
against the Company, other than claims incurred under the Company's
Petrosurance policy.
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ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.1 Fees and Expenses. All costs and expenses incurred by PDC
in connection with this Agreement and the transactions contemplated hereby
shall be paid by PDC; such costs and expenses incurred by the Sledges or the
Company up to a maximum of $38,000 shall be paid by PDC, and any such fees and
expenses in excess of that amount shall be paid by the Sledges.
SECTION 4.2 Reasonable Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Stock Purchase and the other
transactions contemplated by this Agreement and the prompt satisfaction of the
conditions hereto.
SECTION 4.3 Public Announcements. Before issuing any press release or
otherwise making any public statements with respect to the transactions
contemplated by this Agreement, PDC, on the one hand, and the Sledges, on the
other, will consult with each other, and will undertake reasonable efforts to
agree upon the terms of such press release, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable law or by obligations pursuant to any listing
agreement with the Nasdaq National Market.
SECTION 4.4 Employee Benefits. All employee benefit plans and
programs of the Company, including the Company Profit Sharing Plan shall
terminate on the Closing and, subject to all applicable laws, PDC shall cause
all vested rights, benefits and assets of such plans and programs to be
distributed to the eligible participants in accordance with the terms of such
plans. In the case of the Company Profit Sharing Plan, Xxxxxxxxx Energy, Inc.
("PEC") and PDC shall also cause the Company to apply for a favorable
determination letter from the IRS prior to distribution of plan assets. Until
all plan assets are fully distributed to participants, copies of all
correspondence among the Company, the Trustee, the Administrator of the Plan
and the IRS in connection with termination of the Company Profit Sharing Plan
will be sent to G Xxxxxx, with a copy to Xxxxxx Xxx Xxxxxxx, at the addresses
set forth for these individuals in Section 7.1 hereof. The employees of the
Company who continue as employees of "PEC" or any of PEC's subsidiaries,
including PDC, shall be provided with employee benefits under plans and
programs which, in the aggregate, are no less favorable than those provided
pursuant to the plans and programs of PEC and its subsidiaries (including PDC)
in effect on the date hereof for the benefit of all employees of PEC or any of
its subsidiaries (including but not limited to stock option, life insurance,
medical, profit sharing (including 401(k)), severance, salary continuation and
fringe benefits). For purposes of eligibility to participate in and vesting in
benefits provided
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to employees, individuals who are employees of the Company on the Closing Date
who continue as employees of the Company or PDC, will be credited with their
years of service with the Company and years of service with prior employers to
the extent service with prior employers is taken into account under analogous
plans of the Company.
SECTION 4.5 Sledges Indemnification.
(a) After the Closing Date, the Sledges (other than J Xxxxxx
who enters into the indemnification provided for in this Section 4.5(a) solely
for purposes of Sections 3.3 and 3.4 above) shall jointly and severally
indemnify and hold PEC and PDC harmless against and in respect of all actions,
suits, demands, judgments, costs and expenses (including reasonably attorneys'
fees of PEC or PDC), in excess in the aggregate of $100,000, but after giving
effect to insurance recoveries, if any, relating to any misrepresentation,
breach of any representation or warranty or non-fulfillment of any agreement on
the part of the Sledges under this Agreement, other than with respect to the
representation and warranty contained in Section 3.17 hereof, as to which there
will be no such indemnification; provided, however, there shall be no such
limitation (other than giving effect to insurance recoveries, if any) on the
obligation of the Sledges to indemnify and hold PEC or PDC harmless against and
in respect of all actions, suits, demands, judgments, costs and expenses
(including reasonable attorneys' fees) for any knowing and wilful
misrepresentation or violation of this Agreement. Any written notice of claim
for indemnification shall be given to G Xxxxxx, as representative of the
Sledges, by PEC or PDC within 30 days after it has knowledge of any
misrepresentation or breach of warranty or non-fulfillment of any agreement on
the part of the Sledges, which may give rise to a claim for indemnification.
This indemnification provided for in this Section 4.5(a) shall terminate and be
of no further force and effect two years from the Closing Date, except (i) as
to any representation or warranty as to which a written notice of claim for
indemnification has been given to G Xxxxxx, as representative of the Sledges,
prior to the expiration of such two-year period; and (ii) for a claim for
indemnification for unpaid or undisclosed federal income tax liability given to
G Xxxxxx, as representative of the Sledges, prior to the expiration of the
applicable period of limitations. Notwithstanding anything in this Section
4.5(a) to the contrary, any loss incurred by the Company, PEC or PDC as a
result of the failure of the performance by the Sledges of their agreements
contained in Section 4.9 or G Xxxxxx of his agreement contained in Section 4.10
shall not be offset against the $100,000 "basket" provided for above in this
Section.
(b) After the Closing Date, and, in addition to, but separate
from, the indemnification contained in Section 4.5(a), the Sledges (other than
J Xxxxxx) shall jointly and severally indemnify and hold PEC and PDC harmless
against and in respect of all actions, suits, demands, judgments, costs and
expenses (including reasonable attorneys' fees of PEC and/or PDC), but after
giving effect to insurance recoveries, if any, relating in any way to the ranch
real and personal property to be sold to Xxxxxx Ranches, Ltd. pursuant to the
Asset Purchase Agreement referred to in Section 6.1.
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SECTION 4.6 Repayment of Bank Debt. Prior to the Closing Date, the
Sledges shall cause the Company to repay all indebtedness of the Company for
borrowed money including, but not limited to, the loans from West Texas State
Bank and Norwest Bank Texas, Midland, N.A.
SECTION 4.7 Repayment of Sledges Indebtedness to the Company. On or
prior to the Closing Date, G Xxxxxx shall pay to the Company all principal and
interest on monies borrowed by, or advance to, him or any of the other
stockholders of the Company (total principal and interest balance of
$579,091.97 as of the date of this Agreement).
SECTION 4.8 Certain Tax Matters.
(a) The parties recognize and agree that the S election of the
Company shall be terminated under Section 1362(d)(2) of the Code on the Closing
Date as a result of the Company ceasing to be a small business corporation.
The parties further agree that under Section 1362(d)(2)(B) the termination will
be effective on the Closing Date, that under Section 1362(e)(1)(A) the S short
year return for 1996 will be for the period of January 1, 1996, through the day
before the Closing Date, and that under Section 1362(e)(1)(B) the C short year
return for 1996 will include the day on which the Closing Date occurs.
Accordingly, the parties further agree that any gain or loss from the sale of
assets pursuant to Section 6.1 hereof shall be reportable in such C short year.
(b) For each taxable period of the Company that ends before
the Closing Date, G Xxxxxx shall cause to be timely prepared and filed with the
appropriate authorities all tax returns of the Company and shall cause to be
paid by the parties responsible therefor all taxes when due. In completing the
foregoing obligations to cause to be prepared such tax returns, G Xxxxxx may
utilize at no cost to him the tax return preparation services of the employees
and the accountants of the Company and PDC on a reasonable and good faith basis
and subject to the reasonable prior approval of the Company and PDC. PDC shall
cause to be prepared and filed all tax returns for the Company for tax periods
not described in the immediately foregoing sentence, and the Company or PDC
shall pay all taxes required to be paid for such periods.
(c) G Xxxxxx, the Company and PDC reasonably and in good faith
shall cooperate with each other in preparing and filing all tax returns,
including maintaining and making available to each other all records necessary
in connection with the preparation and filing of such tax returns.
(d) G Xxxxxx shall be responsible for causing to be filed any
amended tax returns of the Company for taxable periods ending prior to the
Closing Date which are required as a result of an examination or adjustments
made by taxing authorities, and for causing to be paid by the parties
responsible therefor when due any taxes resulting therefrom. Any such amended
returns shall be furnished to PDC for approval (which approval shall not be
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unreasonably withheld), signature and filing at least ten (10) business days
prior to the due date for the filing of such amended returns.
(e) If a claim is made by any taxing authority:
(i) For any taxable period ending before the Closing Date, G
Xxxxxx shall control the proceedings taken in connection with such
claim; and
(ii) For any taxable period ending on or after the Closing
Date, PDC shall control the proceedings taken in connection with such
claim.
Subject to the immediately foregoing clauses (i) and (ii), the parties
reasonably and in good faith shall cooperate with each other in the contesting
of any tax claim, and shall keep each other fully apprised of the status of
such claims. Notwithstanding any of the foregoing to the contrary, the Company
and PDC shall not without the prior written approval of G Xxxxxx (1) agree to
an extension of the statute of limitations with respect to any taxable period
of the Company ending before the Closing Date or (2) amend any tax return of
the Company for any taxable period of the Company ending before the Closing
Date.
(f) If G Xxxxxx is unable to act under the foregoing
provisions of this Section for any reason, then X Xxxxxx shall act in his
place, or if he is also unable to act, then M Xxxxxx shall act in his place.
(g) The parties recognize and agree that the Company has
intangible assets consisting of goodwill, going concern value and customer
lists, and specialized know-how, having a value of at least $1,000,000. The
parties also agree not to take a position for tax purposes inconsistent with
such agreed minimum value.
SECTION 4.9 Xxxxx Drive Office Lease. The Sledges agree (i) to assume
the Xxxxx Drive office lease as of the Closing Date and to use their best
efforts to cause the Company to be released as a party to the lease and from
any further obligation or liability with respect thereto, and in any event will
indemnify and hold harmless the Company from any whatsoever and further
liability under the lease, and (ii) during the period beginning on the Closing
Date and ending on December 31, 1996, to allow PDC and the Company to have
access to the office for use from time to time by accounting personnel and
auditors of PDC and the Company.
SECTION 4.10 IBM Lease. G Xxxxxx agrees to assume, or cause an
affiliate of G Xxxxxx, to assume the IBM lease as of the Closing Date and to
indemnify and hold harmless the Company from any further liability under the
lease.
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ARTICLE V
CONDITIONS PRECEDENT TO THE STOCK PURCHASE
SECTION 5.1 Conditions to Each Party's Obligation to Effect the Stock
Purchase. The respective obligations of each party to effect the Stock
Purchase shall be subject to the fulfillment or waiver (where permissible) at
or prior to the Closing Date of each of the following conditions:
(a) No Order. No Governmental Entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of prohibiting the Stock Purchase or any of the other transactions
contemplated hereby; provided that, in the case of any such decree, injunction
or other order, each of the parties shall have used reasonable best efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as practicable any decree, injunction or other order that may be
entered.
(b) A Consulting Agreement in the respective forms attached
hereto as Exhibits A(I) and A(II) shall have been executed and delivered by PDC
and by X Xxxxxx and M Xxxxxx, as the case may be.
(c) A Non-Competition Agreement in the respective forms
attached hereto as Exhibits B(I), B(II), and B(III), shall have been executed
and delivered by X Xxxxxx, M Xxxxxx and G Xxxxxx, as the case may be.
SECTION 5.2 Conditions to Obligation of the Sledges to Effect the
Stock Purchase. The obligation of the Sledges to effect the Stock Purchase
shall be subject to the fulfillment at or prior to the Closing Date of the
following additional conditions; provided that the Sledges may waive any of
such conditions in their sole discretion:
(a) Performance of Obligations; Representations and
Warranties. PDC shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date, each of the representations and warranties of PDC contained
in this Agreement that is qualified by materiality shall be true and correct on
and as of the Closing Date and each of the representations and warranties that
is not so qualified shall be true and correct in all material respects on and
as of the Closing Date.
(b) Officers' Certificate. PDC shall have furnished to the
Sledges a certificate, dated the Closing Date, signed by the appropriate
officers of PDC, certifying to the effect that to the best of the knowledge and
belief of PDC, the conditions set forth in Section 5.1 and this Section 5.2(a)
have been satisfied in full.
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(c) Payment of Purchase Price. PDC shall have made delivery
of the Purchase Price as provided in Section 1.2 of this Agreement.
SECTION 5.3 Conditions to Obligations of PDC to Effect the Stock
Purchase. The obligations of PDC to effect the Stock Purchase shall be subject
to the fulfillment at or prior to the Closing Date of the following additional
conditions, provided that PDC may waive any such conditions in its sole
discretion:
(a) Performance of Obligations; Representations and
Warranties. The Sledges shall have performed in all material respects each of
their agreements contained in this Agreement required to be performed on or
prior to the Closing Date, each of the representations and warranties of the
Sledges contained in this Agreement that is qualified by materiality shall be
true and correct on and as of the Closing Date and each of the representations
and warranties that is not so qualified shall be true in all material respects
on and as of the Closing Date.
(b) Officers' Certificate. The Sledges shall have furnished
to PDC a certificate, dated the Closing Date, certifying to the effect that to
the best of the knowledge and belief of each of them, the conditions set forth
in Section 5.1 and this Section 5.3(a) have been satisfied.
(c) Opinion of Meadows, Owens, Collier, Reed, Cousins & Blau,
L.L.P. PDC shall have received an opinion of counsel from Meadows, Owens,
Collier, Reed, Cousins & Blau, L.L.P., counsel to the Company and the Sledges,
dated the Closing Date, substantially to the effect that:
(i) The incorporation, existence, good standing and
capitalization of the Company are as stated in this Agreement; the
authorized shares of Company Stock are as stated in this Agreement; all
outstanding shares of Company Stock are duly and validly authorized and
issued, fully paid and non-assessable and have not been issued in
violation of any preemptive right of stockholders; and, to the knowledge
of such counsel, there is no existing option, warrant, right, call,
subscription or other agreement or commitment obligating the Company to
issue or sell, or to purchase or redeem, any shares of its capital stock
other than as stated in this Agreement.
(ii) This Agreement has been duly authorized, executed and
delivered by each of the Sledges, and (assuming the due and valid
authorization, execution and delivery by PDC) constitutes the legal,
valid and binding agreement of him/her enforceable against him/her in
accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by the
effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
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(iii) The execution and performance by the Sledges of this
Agreement will not violate the Articles of Incorporation or By-laws of
the Company and will not violate, result in a breach of, or constitute a
default under, any material lease, mortgage, contract, agreement,
instrument, law, rule, regulation, judgment, order or decree known to
such counsel to which the Company or any of the Sledges is a party or to
which they or any of their properties or assets may be bound.
(iv) To the knowledge of such counsel, there are no actions,
suits or proceedings, pending or threatened against or affecting the
Company or any of the Sledges by any Governmental Entity which seek to
restrain, prohibit or invalidate the transactions contemplated by this
Agreement.
(v) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental agency or body which
has not been obtained is required on behalf of the Company or any of the
Sledges for consummation of the transactions contemplated by this
Agreement.
(vi) Each Consulting Agreement between PDC and each of X Xxxxxx
and M Xxxxxx constitutes the legal, valid and binding agreement of him
enforceable against him in accordance with its terms, except to the
extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of
general applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
(vii) Each Non-Competition Agreement between PDC and each of G
Xxxxxx, X Xxxxxx and M Xxxxxx constitutes the legal, valid and binding
agreement of him enforceable against him in accordance with its terms,
except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws of general applicability relating to or affecting the
enforcement of creditors' rights and by the effect of general principles
of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
In rendering such opinion, counsel for the Company and the Sledges may rely as
to matters of fact upon the representations of officers of the Company and of
the Sledges contained in any certificate delivered to such counsel and
certificates of public officials.
Such opinion shall be limited to the laws of the United States of
America and the State of Texas.
(d) Officer and Director Resignation Letters. PDC shall have
received a resignation letter dated the Closing Date from each of the directors
and officers of the Company.
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(e) Company Stock Certificates. PDC shall have received all
of the Company Stock certificates from the respective stockholders of the
Company duly endorsed to PDC.
(f) Xxxxx Drive Office Lease and IBM Lease. The agreements
contained in Sections 4.9 and 4.10 shall have been performed to the
satisfaction of PDC.
(g) G Xxxxxx or an affiliate thereof shall have assumed the
IBM Lease.
ARTICLE VI
POST CLOSING COVENANTS
SECTION 6.1 Sale of Assets to Xxxxxx Ranches, Ltd. Each of PEC and
PDC and the Sledges covenants and agrees that, immediately following the
Closing Date, it/he/she will cause the execution, delivery and performance of
the Asset Purchase Agreement in the form attached hereto as Exhibit C to this
Agreement. Each of PEC and PDC covenants and agree that immediately following
the Closing they will cause the Company to assign all of the Company's rights,
title and interest in and to the following three club memberships to G Xxxxxx
(Midland Country Club), X Xxxxxx (Midland Petroleum Club) and M Xxxxxx (Midland
Petroleum Club) for $1,000 each.
SECTION 6.2 Access to Information. PDC agrees that it will cause the
Company to (i) maintain the pre-Closing business and financial records of the
Company in the offices of PEC and PDC in Snyder, Texas for a period of up to
seven years following the Closing Date, and (ii) provide the Sledges and their
respective financial and tax advisors access to such records during the
Company's normal business hours on three days' prior written notice to PDC, as
set forth in Section 7.1 hereof.
SECTION 6.3 Use of Name. PDC agrees to cause the Company to change
its name promptly following Closing to any name chosen by PDC which does not
include the name "Xxxxxx." PDC further acknowledges and agrees that it will
promptly cause the Company to terminate and/or abandon any and all assumed name
certificates or other public documents known to PDC claiming the right of the
Company to use any assumed name which contains the name "Xxxxxx." PDC also
agrees to cause the Company to promptly execute any and all other documents
reasonably requested by the Sledges, which document the agreement by PDC and
the Company to abandon all rights held by the Company to any use of the name
"Xxxxxx" following the Closing.
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ARTICLE VII
GENERAL PROVISIONS
SECTION 7.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, sent by
overnight courier or telecopied (with a confirmatory copy sent by overnight
courier) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to PDC, to
Xxxxxxxxx Energy, Inc.
0000 Xxxxxx Xxxxxxx
X.X. Xxxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
with copies to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxx & Xxxxxxxxx
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
(b) if to the Xxxxxx Stockholders, to
H. Gene and Xxxxx X. Xxxxxx
7 Hawthorne
Xxxxxxx, Xxxxx 00000
Xxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Xxxxxxx X. Xxxxxx
3904 Xxxxxx
Xxxxxxx, Xxxxx 00000
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with copies to:
Xxxxxx Xxx Xxxxxxx
Meadows, Owens, Collier, Reed, Cousins & Blau, L.L.P.
0000 XxxxxxxXxxx Xxxxx
000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
SECTION 7.2 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated, and the words "hereof', "herein" and "hereunder"
and similar terms refer to this Agreement as a whole and not to any particular
provision of this Agreement, unless the context otherwise requires. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
SECTION 7.3 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
SECTION 7.4 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, including the documents and instruments referred to herein, (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties any rights or remedies hereunder; provided, however, that
legal counsel for the Sledges and the Company hereto may rely upon the
representations and warranties of the Sledges contained herein and in the
certificates delivered pursuant to Sections 5.3(b) and (c).
SECTION 7.5 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 7.6 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 7.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other
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conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby are not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the transactions be consummated as originally contemplated to the fullest
extent possible.
SECTION 7.8 Enforcement of This Agreement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
IN WITNESS WHEREOF, PDC and each of the Sledges have executed this
Agreement as of the date first written above.
PDC:
XXXXXXXXX DRILLING COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxx
Chief Executive Officer
Attest:
/s/ Xxxxx X. Xxxxx
------------------------------------
Xxxxx X. Xxxxx, Secretary
SLEDGES:
/s/ H. Xxxx Xxxxxx
-------------------------------------
H. Xxxx Xxxxxx
/s/ Xxxxx X. Xxxxxx
-------------------------------------
Xxxxx X. Xxxxxx
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/s/ Xxxxx X. Xxxxxx
-------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx
THE UNDERSIGNED, BEING THE STOCKHOLDERS OF THE COMPANY OTHER THAN THE
"SLEDGES" (AS THAT TERM IS DEFINED IN THIS AGREEMENT), HEREBY (i) AGREE TO THE
PROVISIONS OF SECTION 1.2 OF THIS AGREEMENT, IN PARTICULAR, THE LUMP-SUM
PAYMENT OF THE PURCHASE PRICE BY A SINGLE WIRE TRANSFER PAYABLE TO THE ORDER OF
H. XXXX XXXXXX, AS TRUSTEE FOR ALL STOCKHOLDERS OF THE COMPANY AS A GROUP, AND
(ii) RELEASES PEC AND PDC AND THEIR RESPECTIVE OFFICERS, DIRECTORS AND
EMPLOYEES FROM ANY CLAIM ANY OF THE UNDERSIGNED MAY HAVE AS A RESULT OF THE
FAILURE BY THE SLEDGES TO PAY TO THE UNDERSIGNED THE UNDERSIGNED'S SHARE OF
SUCH PURCHASE PRICE.
THE XXXXXX XXXX XXXXXX 1986 THE XXXXXX XXXX XXXXXX 1986
SPECIAL TRUST II FOR SPECIAL TRUST II FOR
XXXXX X. XXXXXX XXXXXXX X. XXXXXX
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------ --------------------------------
Xxxxx X. Xxxxxx, Co-Trustee Xxxxxxx X. Xxxxxx, Co-Trustee
By: By:
------------------------------ --------------------------------
X.X. Xxxxxxx, Co-Trustee X.X. Xxxxxxx, Co-Trustee
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxx
----------------------------------- -------------------------------------
XXXXX X. XXXXXX, as Custodian for XXXXXXX X. XXXXXX, as Custodian for
Xxxxxxx Xxxxxx and Xxxxxx Xxxxxx Xxxxxxx Xxxxxx and Xxxxxx Xxxxxx
--------------------
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THE UNDERSIGNED, BEING THE SOLE STOCKHOLDER OF PDC, HEREBY AGREES
TO BE BOUND BY THE PROVISIONS OF SECTION 4.4 AND 6.1 OF THIS AGREEMENT.
XXXXXXXXX ENERGY, INC.
By /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxx
Chief Executive Officer
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